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Association for private pensions: Pillar 2 had best profit in 2019


The seven compulsory private pension funds (Pillar 2) had an 2019 an average profit of 11.8%, the best performance in the last 9 years, on the background of recovering depreciation caused by effects of Government order 114/2018 in economy and in financial markets, as well as unexpected evolution of Bucharest Commodity Exchange,  the Association for Privately Administered Pensions in Romania (APAPR) announced on Thursday.

“The overall profit obtained by all Pillar 2 funds since May 20, 2008 to the end of 2019 was 154%, that is an average profit of 8.35% for the whole period of Pillar 2 operation.  This indicator is much over the total inflation rate in the period analyzed (41.8%), that is the average inflation rate analyzed for the same period (3.05%)”, a press release shows.

O the 13 billion euros administered by Pillar 2 at the end of 2019, over 2.6 billion euros (12.6 billion lei) represent the net profit obtained from investments, exclusively for the over 7.4 million Romanians who contributed to the system.

“This amount is net of all administration commissions perceived, which are now among the most competitive at European level, following the changes operated by law in the past year,”a press release shows.

APAPR draws attention that performances of pension funds in Romania and the world will always be somewhat volatile, closely reflecting the evolution of financial markets and of economy on the whole, for a stock structure.

“Moreover, these evolutions are strongly influenced not only by the economic environment, but also by political decisions. Such a moment was the adoption of order 114/2018, which produced sudden and severe drops of financial markets in Romania, including Bucharest Stock Exchange, where pension funds have significant investments. In this context, the cumulated profit of Pillar 2  lost 4% in less than 2 weeks at the end of 2018. That was the reason why 2018 was the only year since the setting up of Pillar 2 when profit was below inflation rate in a year,” the press release points out.

APAPR draws attention to the fact that any analysis concentrating exclusively on 2018 and completely ignoring exceptional cumulated historic results of pension funds is incorrect and will invariably lead to wrong conclusions.