Business organizations in Romania appeal for keeping mandatory private pension funds

Some 15 business organizations and operators on the capital market launched an unprecedented appeal to the Government to keep the current three-pillar architecture of the local pension system.

They argue that the mandatory private pensions were launched ten years ago as an answer to Romania’s demographic decline, which will put pressure on the state pension system in the future and that the demographic forecasts show that the problems continue to grow. Thus, a smaller number of active people will have to support a growing number of retirees, leading to extreme pressure on the country’s finances.

The organizations also point out that the mandatory private pension funds in Romania have had the second highest yield out of 38 countries between 2008 and 2016. They invested RON 35 million and made a return of over RON 7 billion.

Another benefit of these funds is that they invest most of their money in the country, financing the state and the private companies listed on the Bucharest Stock Exchange. Pension funds own shares worth about EUR 1.9 billion on the Bucharest Stock Exchange, representing about 20% of the free-float.

Thus, the Government must maintain the mandatory private pension funds and find ways to increase the contributions to these funds, according to the 15 organizations. Among those who signed this appeal are Amcham, the Foreign Investors Council, Romanian Business Leaders, the Romanian Business People’s Association (AOAR) and the Bucharest Stock Exchange (BVB).

Romania’s Govt. ponders suspending contributions to mandatory private pension funds

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