The Foreign Investment Council (FIC) and AmCham Romania, the biggest business organization representing foreign companies in Romania, are worried about possible Government policies that will affect the private pension fund scheme in Romania.
The two organizations have asked the Government not to change this scheme and warned that such a move would have negative economic and social effects.
“In FIC’s opinion, the reform of Pillar 2 cannot be justified by evolutions of public debt and current deficits. The future welfare of current employees cannot be jeopardized by short term thinking,” reads a FIC press release.
“Great calamities and wars might raise legitimate claims to old-age savings in Pillar 2 but deficits and public debt must be brought on a healthy trajectory with different means,” according to FIC.
According to the organization, the public pension fund in Romania will be under great pressure by 2040, due to demographic changes, and Pillar 2 pension funds will be able to take on some of this burden.
“The money which are currently being saved by employees in Pillar 2 are not only a form of insurance for the future but there is also an important source of funding for today’s economy (…) The Romania capital market would suffer terribly by the absence of pillar 2,” according to FIC.
Over 90% of the EUR 9 billion accumulated in Pillar 2 pension funds is invested in the local capital market.
Talks about a significant reform of the private pension system in Romania have intensified in recent weeks, although the Government hasn’t presented yet any concrete measures in this sense. Economists warn that any decision in this area would only have short-term effects in correcting the state’s budget imbalances.