The private pension funds’ managers accuses the government of pushing Romania into chaos with the new fiscal measures, which abolish the Pilar II pension scheme.
“The measures proposed by the emergency ordinance project regarding the Pillar II private pensions scheme abolish de facto this savings system of population for the retirement age, with devastating effects on the Romanians’ future incomes, the capital market, the whole financial sector and the Romanian economy as a whole,” Romania’s private pensions funds association (APAPR) said in a press release.
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.
At the end of September, Pillar II pension funds had total assets of EUR 10 billion.