RBL: Pillar II retirement account savings trimmed 12.9 pct for 7 ml contributors because of calendar non-observance

Seven million Romanian contributors have 12.9 percent less in their retirement saving accounts because of the non-observance of the Pillar II contributions increase calendar, which resulted in the loss of both the money promised under law and of the money multiplication effect, argue Romanian Business Leaders (RBL) representatives.

"Today, 7 million Romanian employees have 12.9 percent less money in their pension saving accounts because the non-observance of the calendar for the increase of Pillar II contributions has resulted in loss of money promised under the law and of the money leveraging effect. With a 5.37 percent average return overall since the first monthly contributions entered accounts in May 2008 and until end-2015, the system ranks 1st among EU private pension systems, according to a 2016 survey by the Better Finance organization, titled 'Pension Savings - The Real Return'. For an average annual return of 5 percent on the investment, the value of the individual account doubles in 15 years provided that the monthly contribution stays constant," RBL explains in a Monday release.

In this context, the organization calls on the authorities to respect their word and not render the entire economy vulnerable and weaken the country's ability to protect itself against external imbalances for the sake of sorting out, at any cost, short-term emergencies. The failure to comply with the calendar to increase contributions to pension Pillar II seriously harms the confidence of entrepreneurs, investors and the 7 million Romanian employees in the Romanian state's ability to honor its promises.

According to the cited source, the current pension system is the only structural reform in Romania that has lasted for a decade to the successive ruling formulas. It is a system that contributes to the development of the economy - on the one hand, through investments on the capital market and on the other hand, by offering an alternative financing solution to Romanian entrepreneurs and local public authorities.

"Despite these benefits, the Romanian authorities did not respect their promise to increase the contribution to Pillar II pensions to 6 percent by 2016 and even take contrary action - in 2018 the contribution was cut from 5.1 to 3.75 percent. Failure to comply with the calendar for rising contributions to the Pillar II pension scheme provided for by the Law on Privately Managed Pension Funds has already produced cumulative negative effects," the release said.

Romanian Business Leaders (RBL) is a non-political, non-profit NGO that provides a platform for action and social involvement for entrepreneurs and private business owners.

According to Financial Supervisory Authority data, assets managed by the mandatory private pension funds amounted to approximately 42.53 billion lei as of March 31, 2018, up 25.22 percent from March 31, 2017. AGERPRES (RO - author: Andreea Marinescu, editor: Mariana Nica; EN - author: Simona Klodnischi, editor: Adina Panaitescu)