Romanian gov’t to temporarily suspend transfers to Pension Pillar II. Starting 2019 the contribution will be a fixed amount

Ioana Erdei 20/05/2018 | 19:17

The Romanian government’s Legislative Program for 2018 includes, among other priorities, a draft act on the functionality of the second (private) pension pillar. This document reveals a plan to suspend the transfer of part of pension contributions from all employees to the private administered investment funds, between July 1st and December 31st of this year.

Also, according to the document quoted by Mediafax, the social contribution (CAS) will be collected fully to the national budget. Currently, 3.7 percent of the contributions collected from employees are transferred to the second pension pillar.

The new draft will settle a fixed contribution of RON 84 in the first year, which will increase annually to RON 125 in the next five years. This amount will be deducted from the income tax amount paid to the state budget. There will also be a contribution paid by the employer in the same amount as the one paid by the employee (RON 84) that will be deducted from the corporation tax depending on the size of the company (50, 25, 10 employees), according to the government’s document.

The changes come after social contributions were transferred entirely to the employee at the beginning of this year.

The American Chamber of Commerce in Romania (AmCham Romania) expressed, last week, its concern regarding possible measures and public policies that could affect the wealth of the employees during their career and retirement period, and that could at the same time reduce the development potential of the Romanian financial market.

The Foreign Investors Council (FIC), which brings together companies hiring approximately 200,000 people, has also expressed concern about possible policy measures affecting the three-pillar pension savings system and the lack of transparency in which these are analyzed and promoted.

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