Mandatory private pension funds' assets up to EUR 2.7 bln in Romania, yearly yield at 11.4%

Private pensions funds in Romania reached assets of EUR 2.75 billion in the first half of 2013, according to data from the Association for Privately Managed Pensions Funds in Romania. There were 6.2 million Romanians whose pensions were managed by private funds after the first six months of the year, out of which 5.9 million are part of the mandatory private pensions pillar II. However, according to the association, the National Public Pensions House wired the due monthly contributions to the private pensions for only 3.6 million of them. At present, the state should wire 4 percent of the gross income to the private pensions fund, double the 2 percent it was in 2008, when the system was started. The ratio should go up to 6 percent in 2016, increasing by 0.5 percentage points every year. Mid-2013, five years after the private pensions system was launched in Romania, the growth rate for private pensions assets for pillar II was of 45.6 percent compared to mid-2012. When it comes to their yield, it was an average of 11.4 percent a year in the last five years. The third pillar of the private pensions funds, which is only optional, has 300,000 participants, but less than half pay the monthly contributions themselves. In 45 percent of the cases, the employer pays the optional private pension too, while 45 percent of the participants pay themselves. For the remainder 10 percent, contribution is mixed – the employer and the employee both contribute to the optional fund. This third pillar, which was introduced 6 years ago, had assets of EUR 154 million mid-2013, 34 percent more than mid 2012. The average yield on this segment was of 9.4 percent a year in the last five years. editor@romania-insider.com