Romanian government to adopt major changes in private pensions scheme: slams fees and allows contributors to take their money out before retirement

The Romanian government will adopt until the end of this year an emergency ordinance that will introduce major changes in private pensions scheme, according to the Finance minister Eugen Teodorovici. The government will slam pension funds’ fees and will allow contributors to take their money out before retirement.

“The Pilar II pension funds management fee will be reduced from 2.5 percent to 1 percent,” Teodorovici said.

The project also allows contributors to take their money out at any moment after five year of contributions at a fee of 2 percent of their assets, a severe blow to Romania’s mandatory private pensions (or Pillar II) funds.

“Assets are transferred to contributors at an early repayment fee of 2 percent,” Teodorovici indicates.

At the end of last year, the government cut the contribution to Pillar II to 3.75 percent of gross wages in 2018, from 5.1 percent last year, justifying the decision by the increase of gross earnings by 25 percent after the transfer of social contributions from employers to employees.

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At the end of September, Pillar II pension funds had total assets of EUR 10 billion.