The Romanian Government plans to transfer part of the contribution to the mandatory private pension funds, or the second pillar, to the public pension budget, namely the first pillar, according to government sources.

Decreasing the contribution to the mandatory private pension funds could be introduced via an emergency ordinance in about two weeks.

Local media published last week reports about the Finance Ministry’s intention to reduce the state contribution to the private pension funds from 5.1% of the gross wage to 2.5%.

Romanians paid RON 5.9 billion (EUR 1.2 billion) to the private pension funds in 2016. People up to 35-year old are obliged to pay 5% of their gross wage to the second pillar every month. The contribution is paid to the state, which then transfers it to the private pensions fund chosen by the employee.

Tudose wrote in a Facebook post that the second pillar’s average yield has been 4% since 2008. He said that some categories of employees who’ve been registered exclusively in the public pension system will have a higher pension than those who were also part of the second pillar. This applies to employees who’ve had a wage growth that was 4% above the average wage growth, according to Tudose.

editor@romania-insider.com