The Chartered Financial Analyst (CFA) Romania criticizes the Government decision to reduce the mandatory contribution to Pension Pillar II from 5.1% to 3.75% as of 2018, and claims that the fall in the relative value of the contribution will lead to a significant reduction in the incomes of future pensioners, a communiqué from the organization reads.
“By this Government decision, the future pensioners will be more influenced by political decisions regarding the calculations and the value of the pension point in the future and will have less to say in regard to their long-term welfare. Romania has committed, through the Convergence Programme for 2015-2018, sent to the European Commission by the Finance Ministry, to ensure a contribution at least of 6% of the employees’ gross revenues to the private pension funds, for exactly the purpose to ensure the sustainable reform of the pension system, which currently faces huge deficit,” the release reads, according to capital.ro.
CFA Romania says the current pensions are paid two thirds from the current employees’ contributions and one third from Government loans – this would lead to higher pressures on the state budget social security system, whereas the private pension will become a vital source for living for the pensioners.
They would lose about EUR 300 million as amount not paid to their accounts (at the 2016 value) and due to the lack of returns for these amounts. CFA Romania underlines that the public pension has no returns, it is not invested, the amounts are used for current payments.
CFA Romania also highlights that Pension Pillar II had very good financial results from its launching (2008-2017), the average return was of approx. 10%, one of the highest in the region.
CFA Romania is the association of the investment professionals in Romania, many of whom holding the Chartered Financial Analyst (CFA) title, a qualification administered by CFA Institute (USA).