Liberal senator Florin Cîţu has released a document assigned to the European Commission, revealing the Government has informed the European Commission as of early April about its intention to suppress the Pension Pillar II.
„The Government, PSD, the Finance minister, are all LYING! During April 10-11 there has been discussions with the EC representatives that Romania ignores the alarming increase of the structural deficit. Amid these discussions, the Romanian Government has informed the EC about its plans to suppress the Pension Pillar II and that it will make this contribution „optional”. As you can read in the text, there are more risks, including losing the benefits following enforcing the clause for systemic reforms which allows deficit deviations,” Florin Cîțu said.
„Why is PSD making all this circus if even the EC knows? What is PSD hiding? PSD needs time to come up with a communication strategy. They already have the plans to suspend the contributions for the pillar II and now they are thinking how to push them on us and cause as less fuss as possible. The Social Democrats are lying just to save some more time,” the PNL senator added.
According to the document quoted by him, the Gov’t would get over RON 7 billion annually, which is about EUR 1.5 billion, money that would help the Executive cover for the budgetary deficit.
„The government is considering a further reversal of the 2008 systemic pension reform, which introduced the second pension pillar. The authorities have already reduced, as part of the 2018 budget, the share of social contributions transferred to the second pension pillar. According to public statements, the government is considering to make the transfers to the second pension pillar optional, and to make a decision by end-June 2018, after consultation with stakeholders. Those transfers amount to around RON 7 billion annually (around EUR 1.5 billion; 0.8% of GDP). Such a measure would decrease the fiscal deficit in the short term, as the second pension pillar is classified outside the general government under ESA. However, that fiscal gain would dissipate in the long term as the social contributions diverted from the second pillar would be accompanied by an obligation to pay old-age pensions in the future. In addition, such a reversal could have negative implications for the viability of the pensions system and for the development of capital markets. Making the second pension pillar optional would deprive Romania from the possibility of invoking the systemic pension reform clause under the SGP,” reads the EC document, which also says that the Gov’t in Bucharest is to take a decision on the Pension Pillar II by the end of June.
FinMin retorts: It’s the EC’s subjective opinion
In retort to Citu’s accusations, Finance Minister Eugen Teodorovici told Digi 24 that the Executive doesn’t intend to suspend contributions to Pension Pillar II, saying the EC’s stance in the referred document is ‘a subjective opinion’.
“There is no document that Romania has sent to the European Commission. There were talks in April, as usually, bilateral discussions and after that the EC has released that document that mentions such a possibility. Only that, we have clearly said it, the Romanian Government has no intention to suspend the Pension Pillar II,” Teodorovici stated.
Asked if the suspension of the contributions to Pension Pillar II has been invoked during talks with the EC representatives, FinMin replied:”It is a subjective approach and opinion, the EC voices its stance, which is not the same with the Romanian side’s stance.”