How will pensions be calculated this year? Here is the new information pensioners need to know

Around 40 thousand citizens who became eligible for retirement starting from January 1, 2026, will have their monthly income calculated using indexed coefficients.

The decision published in the Official Gazette and now in force provides for the approval of the indexation of the assessed base of 2024, with an index coefficient of 6.4%, calculated according to the criteria of the current law.

The 6.4% index is applied to calculate the individual annual assessed base, achieved through paid contributions and their revaluations carried out up to 2024, and is used for calculating the initial monthly pension amount for those whose entitlement begins from 1.1.2026 onward.

Information you need to know

Pension expert Kujtim Hoxha, during an interview, explains that the change is related to updating the wage indexation coefficients.

According to Hoxha, these coefficients are used to bring past wages to current value, making them comparable and ensuring fairer treatment for citizens retiring in different years.

“The social insurance law provides that wage indexation coefficients change every year, because citizens with equal contributions should be treated equally.

These coefficients serve to bring past wages into today’s value,” he said.

Expert Hoxha emphasizes that indexation does not represent a direct 6.4% increase in pensions, but is a technical mechanism that improves how pensions are calculated.

In practice, the pension amount depends on years of insurance, wage levels, and contributions paid over time.

“This is not a 6.4% increase in pensions, but a technical mechanism used to calculate pensions more fairly, reflecting past work and contributions,” he said.

For 2026, the retirement age remains 65 for men and 62 for women, while about 39 years of insurance are required for a full pension.

The expert warns that early retirement is accompanied by significant penalties.

“Early retirement is associated with a reduction of 0.6% for each month. If someone retires three years early, the benefit is reduced by about 21.6%, and this remains permanent,” the expert said.

As for amounts, pensions remain closely tied to contributions. Hoxha also highlights the need for greater awareness among citizens about social insurance.

Meanwhile, a serious issue remains the lack of data on contributions for the years 1994–2011, which, according to the expert, affects many citizens.

“A citizen who has paid minimum contributions may receive around 24 thousand lek in pension. With average wages, it goes to around 30 thousand lek, while for higher wages there are limits in the scheme. Citizens should check if they have uncovered periods and complete them before it’s too late. They should also consider additional insurance to avoid a sharp drop in income during retirement,” Hoxha said.

We recall that two days ago the Council of Ministers ratified the agreement with Poland on social insurance.

The decision was announced by the Minister of Finance, Petrit Malaj, after the government meeting.

“These are very necessary agreements, especially for those Albanians who work outside the territory of Albania and want their years of work in our country to be recognized. The Albanian government remains committed to continuing the ratification of similar agreements with all countries where there is an Albanian diaspora,” said Malaj.

Asked about the progress of the agreement with Greece on social insurance, Malaj said that very intensive discussions and negotiations are underway on the Albanian side.

“This is because the diaspora present in Greece is relatively large. We are confident that we will conclude such an agreement, but it is one with a high level of negotiations and conditions due to the large number of Albanians we have in Greece,” Malaj added.

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