Romanian Government is bringing final touch to private pension system reform

Contributors to the mandatory privately-managed pension system (the second pillar) in Romania will be allowed to pull out after contributing at least five years and no more recipients will be allowed to enrol to this system in the future, under the latest version of the amendments considered by the Government under the emergency ordinance scheduled for vote on December 21. The 2.5% (of the managed assets) management fee charged by the asset management companies for the second pillar funds will be cut to 1%. Out of this 1%, 0.5 pp will be re-distributed to the Pension Fund (to the assets of the fund managed by the asset management firm) and another 0.5 pp will be distributed to the Pension House (most likely, to the first pillar), according to the version presented by Hotnews.ro. Those pulling out from the second pillar will not receive their money in cash, but will have the option to transfer their assets to either the first (public) pension fund, or third (private) pension fund. But there is no agreement yet reached between the parties of the ruling coalition on this detail: while the senior Social Democratic Party wants people to opt for either first or third pillar, junior Alliance of Liberals and Democrats wants them to have the option of investing in shares or government bonds. Participants in Romania’s mandatory private pension funds, allowed to withdraw editor@romania-insider.com (photo source: Adobe Stock)