PensionsEurope calls on Romanian Gov’t to safeguard the current legislative framework of private pensions, to continue the mandatory participation to the 2nd pillar

In a release issued on Wednesday, PensionsEurope calls on the Romanian Government to safeguard the Romanian private pension system’s design and warns that of great importance is also to continue the mandatory participation to the 2nd pillar.

“It is important to have adequate contribution levels. We highlight that the European Commission, in the context of the EU Semester, has analyzed the situation of the Romanian pension system in the its Country Report, criticizing the reduction of the contributions directed to the 2nd pillar, which it claims to have been “triggered by short-term fiscal concerns rather than their financial performance” and that the “reform of the second pillar pensions could weaken pension sustainability and the performance of the local capital market”. The Commission has also underlined that “the financial situation and functioning of Romanian private pension funds has not been a matter of concern.

According to OECD data, they were among the top performing pension funds in the new EU Member States in 2016, together with the Polish and Croatian pension.” Of great importance is also to continue the mandatory participation to the 2nd pillar. People need to be participate and save for their own pension. PensionsEurope highlights that 10 years ago Romania has taken the correct decision of setting-up a multi-pillar pension system, accompanying the set-up with a proper planning for its further development. It is important that also the current government respects and implements this. Pension funds play an important part in economic growth and financial markets, and private pension saving should be encouraged to compensate for potential lower state pension benefits. We urge the Romanian government to safeguard the role of private pensions and to not take further measures aimed at deteriorating the role of private funded pensions,” the release reads.

Matti Leppälä, CEO/Secretary General of PensionsEurope, said: “The Romanian Pension Funds’ Association – APAPR, together with other 14 large Romanian financial associations has signed a common statement to call on the Romanian Government to safeguard the private pension system’s design. PensionsEurope supports this statement. Good pension reforms should be based on an in-depth analysis and long term-goals on adequacy and sustainability. Predictability and legislative stability are crucial to the success of any long-term savings system designed to ensure the decent retirement of over 7 million Romanians contributing to these funds, and we urge the government not to introduce measures that could deteriorate the role of funded private pensions in Romania.”

Janwillem Bouma, Chair of PensionsEurope, said: “A pension system that includes also funded parts is better able to achieve its various objectives and is more resilient to the multiple risks to old-age financial security. The decision taken 10 years ago in Romania of setting-up a three-pillar pension system has proved to be a success story, as shown by the very good financial resultsreached by the Romanian pension funds, and by the significant development of local financial markets. The Romanian government should consider raising the contribution rate to private pensions, instead of decreasing it.”