The companies paying high salaries, that is above three gross monthly wages (some $490) will pay a higher social security contribution (CAS), as decided by the Government through Emergency Ordinance 147 published in the Official Gazette on November 13.
The authorities had not previously announced they had such a modification in mind.
The ordinance, released with a rather ambiguous title, "towards regulation of certain financial problems and modification of other normative acts," raises the ceiling of the computational basis for the CAS from three to five gross average monthly salaries in the economy. In other words, the CAS the employer and the employee used to pay until now (34% of the gross wages) amounted to $166 for an $815 gross monthly salary (five times higher the average gross salary), because this percentage was calculated according to the three gross salaries ceiling ($490). The CAS will now amount to $277 (the percentage is now applied to the entire $815 salary).
Yet this regulation will have an even more powerful impact due to the manner of computing the CAS.
"This will make the most powerful impact on those companies with a wide salary spread, because the CAS used to be computed by bringing all those wages to a common denominator of 3 average salaries in the economy. In other words, if a secretary was paid the average wage and an executive was paid four times the average salary, the CAS was not computed separately for the two, but the "fourth average" salary of the executive was added to the one of the secretary and then the CAS computed," Gabriel Sincu with Haarman Hemmelrath & Partner fiscal consulting firm explains.
The increase in the multiple, from three to five, will make the effect of this method to increase the paid contributions even more powerful.
"At any rate, even those companies without a wide salary spread will see a contribution increase," Sincu says.
"The good thing for the well-paid employees is that they will have higher pensions, still this depends on how the salary was negotiated, either gross or net," he added.
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