Mandatory private pension funds in Romania post record yields in 2019

The 7 mandatory private pension funds (Pillar II) in Romania achieved an average yield of 11.8% in 2019, the best performance in the last 9 years, boosted by the positive evolution of the shares traded on the Bucharest Stock Exchange, announced on Thursday the Association of Private Pension Managers in Romania (APAPR).

The BET index, which follows the evolution of blue-chips listed on the Bucharest Stock Exchange, recorded an increase of 35% in 2019, while the BET-TR index, which also includes the dividends paid by BET companies, recorded a return of 47%.

The mandatory private pension funds invest about 20% of their assets in listed shares.

"The total yield achieved by all Pillar II funds from the beginning (May 20, 2008) to the end of 2019 was 154%, resulting in an average annualized return of 8.35% for the entire period of their operation. This is well above the total inflation rate for the period (41.8%), respectively the average annualized inflation rate for exactly the same period (3.05%),” the APAPR statement shows.

Of the EUR 13 billion worth of assets in the portfolios of Pillar II funds, at the end of 2019, over EUR 2.6 bln represent the net profits obtained from investments (the gains achieved by pension fund managers minus the fees charged for managing the funds).

"This amount is net of all the management fees received, which are currently among the most competitive at European level, after the changes made in the legislation in the last year [OUG 114/2018]," the statement said.

Over 7.4 million Romanians have contributed to the Pillar II of the pension system.

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