Early this year, the managers of mandatory pension funds (Pillar II) took a hit, as the 2009 draft budget announced that the contributions will remain at two percent of gross salary. The government did not comply with legislation stating that the contribution must rise 0.5 percent annually after the private pension system is applied, until this arrives at six percent of gross income, in eight years.
“Next year, the contribution to mandatory private pension funds will definitely increase by 0.5 percent, and the funds will administer assets worth €1 bln at the end of 2010,” said Mircea Oancea, President of the Private Pension System Surveillance Commission (CSSPP).
In August 2009, the Organisation for Economic Cooperation and Development (OECD) published a report on the size of private pension systems. In developed countries, private pension systems make up 63.4 percent of gross domestic product (GDP), while in Romania, they represent only 0.18 percent of GDP.
According to the Romanian Pension Funds’ Association (APAPR), besides freezing contributions, all the other factors that influenced the mandatory private pension market were favourable and exceeded expectations. In the first 11 months of this year, Pillar II pension funds posted a return of 16.3 percent.
