Update. Romania’s second pension pillar will not be dismantled, says minister Misa in new statement

Ovidiu Posirca | 29/06/2017 | 14:54

The minister of finance Ionut Misa said on Thursday evening that his previous statement was “wrongly interpreted” and that nor him or the government support such a move.

“You can’t nationalize public funds,” said Misa, adding that the second pension pillar contains public funds managed by private firms.

The contributors to the second pension could move the funds they have here, which are managed by private administrators, to the first mandatory pillar, or the third one which is optional, said Misa initially.

“Pillar II, yes, will be dismantled. Practically, the money will be returned to those that have contributed to the pension pillar, and they have the option to opt for the social insurance budget or for Pillar III, the private one. (…) All those that have contributed will receive their money back,” said Misa.

“We take into account the option for each contributor to opt for the third pension pillar, the private one, or the first pillar. It will be the choice of the contributor,” said Misa during hearings in Parliament.

The head of the Social Democratic Party (PSD), Liviu Dragnea, said this planned move is a “stupidity”. The PSD controls the ruling coalition alongside ALDE.

PM Mihai Tudose said the second pension pillar will not be put out of operation.

The future minister said that the second pension pillar has combined funds worth RON 40 billion. He cited the results of an analysis carried out by authorities according to which each contributor would benefit from a monthly pension of RON 25 from this pillar.

The assets of the mandatory private pension were up 34.14 percent to RON 36.1 billion at the end of May 2017 versus the same period of last year. There are 6.9 million contributors on the private funds.

The news came several months after NN Pensii, which is one of the managers of funds in second pension pillar, got a RON 750,000 fine. NN had notified its clients about a potential nationalization of the funds.

The CEO of NN Pensii, Raluca Tintoiu, also got a fine from the Financial Supervision Authority (ASF) and her management license was withdrawn by the regulator.

The following funds are operational in the second pension pillar: Metropolitan Life Pensii, Aripi, AZT Viitorul tau, BCR, BRD, NN and Vital.

The main indices on the Bucharest Stock Exchange (BVB) were losing 4 percent on Thursday trading, while the RON fell by 0.5 percent against the euro to 4.57.

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