More consultations on Romania's private pensions reveal risks of double taxation

Consultations were held between the government, trade unions, financial markets regulator ASF, and the financial institutions involved, about the draft project for the disbursement of pensions under the pillars II and III. The consultations followed public protests to the draft law inked by ASF and promoted by the government, particularly regarding the ban on complete withdrawal of funds in individual pension accounts.

Overdue since 2011, the law regulating the disbursement of privately-managed pension funds has to be legislated by Romania as part of the OECD membership negotiations.

Besides the terms of the disbursement of the pensions, the debates on August 19 brought into the spotlight the fiscal regime potentially resulting in double taxation of the money saved by individuals out of their net revenues in pillar III funds.

Hotnews.ro asked Radu Crăciun, president of APAPR (the association representing pension fund administrators), who also participated in the debate at the Ministry of Labor, for a point of view on the double taxation of private pensions.

"For pillar II, we are not talking about double taxation; in fact, there are actually favourable fiscal conditions," Crăciun commented.

"On pillar III, however, it's a different discussion because here people contribute from their net pocket, so after paying the income tax and contribution. If, when you receive the money [as a pension], you have to pay again income tax and social security contributions, yes, there is a risk of double taxation," he admitted.

(Photo source: Chernetskaya/Dreamstime.com)