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Romanians have 1.1 billion euro less in Pillar II
Not observing the contribution growth rate for pension administered privately led to a lower accumulation by 12.9% in the Romanians’ accounts in the last 10 years, the impact at Pillar II level being 1.1 billion euros, according to the presentation made by the Association for Privately Administered Pensions in Romania (APAPR) in the Senate Economic Commission.
Law 411/2004 on privately administered pension funds provided a growth calendar for the contribution to Pillar II from 2% of gross income in 2008 to 6% in 2016.
After several delays, the contribution reached 5.1% in 2016 and 2017 and dropped to 3.75% in 2018.
“Because the law was not observed, Romanians have now, after 10 years of Pillar II, amounts 12.9% smaller than they would have had. The impact is 1.1billion euros of not paid contributions”, the presentation shows.
The investment profit of Pillar II over May 2008- February 2018 was 128.3%, that is an average of 8.8% per year since the launch to the present day.
“Overall administered stock reached 41.7 billion lei in 2018. Of that amount, 7.2 billion lei (1.5 billion euros) represent net profit obtained by participants by investing their money”, the presentation shows.
APAPR pointed out that 92% of 9 billion euros of Pillar II are invested in Romanian economy and 75% is invested in bonds in the monetary market.
“At BVB Pillar II funds own 1.9 billion euros (20% of freely transactioned shares) ensuring about 15% of liquidity. Pillar II had a decisive role in the success of public offers launched by BVB, pension funds buying participations up to 20%-25% within offers,”the presentation shows.