Albania's government has approved a 2.7% indexation of all old-age pensions, special pensions and other social insurance benefits, with the increase set to take effect on July 1, benefiting more than 900,000 citizens across the country.

The decision was announced following Friday's cabinet meeting by Minister of Economy, Culture and Innovation Delina Ibrahimaj, who said the annual adjustment is intended to compensate pensioners for the rising cost of living.

According to the government, the increase comes as inflation exceeded 3% this year, driven largely by higher fuel and consumer goods prices linked to ongoing tensions in the Middle East. Officials say the pension adjustment is designed to preserve the purchasing power of retirees and other beneficiaries of Albania's social insurance system.

Based on the 2.7% increase, the average urban old-age pension will rise from 20,123 lekë to approximately 20,666 lekë per month, representing an increase of 543 lekë. Rural pensions will increase from 11,878 lekë to around 12,199 lekë.

Disability pensions will also be adjusted, with beneficiaries in urban areas receiving an average monthly increase of 537 lekë, while those in rural areas will receive an increase of 279 lekë.

The July adjustment marks the first time since 2022 that pension indexation has returned to its traditional mid-year schedule. In recent years, annual pension increases had been implemented in October, delaying the additional payments for several months.

The government said the measure forms part of its broader efforts to cushion households from inflationary pressures and the continued rise in living expenses.