Significant loss for private pension system as a result of low BVB liquidity level

According to the legislation in effect, private pension fund administrators are bound to place part of their assets in capital market quoted bonds, but “One of the problems the private pension fund is faced with is the chronically low liquidity level of the Bucharest Stock Exchange (BVB) and this, in turn, may create other problems for private pension fund administrators as far as compliance with placement policies is concerned. We are currently working with a specialized agency – the Romanian Pension Funds’ Association (APAPR) – toward developing the necessary placement tools to contribute to Romania’s economic growth. Otherwise, in about three years money might be leaving the country by way of investments in other areas of Europe,” Ion Giurescu, private pension funds vice-president of the Insurance Supervisory Commission (ASF), stated Monday at a specialized event, Mediafax notes.
Administrators can invest up to 50 percent of all assets under their management in securities traded on regulated and monitored markets in Romania, other EU Member States, or Europe.
In addition, up to 10 percent of the overall value of pension fund assets can be placed in bonds or other securities traded on regulated and monitored markets and issued by public local administration authorities from third party countries. Over RON 2 billion of RON 15.45 billion worth of assets has been directly invested in 35 BVB-listed Romanian companies.
Mihai Coca-Cozma, vice-president of APAPR, has explained that private pension funds will have at their disposal EUR 500 million for the following two years to participate in public shares offers and corporate bonds.
Data released by BVB indicates RON 44.79 million was traded daily on average in 2013, compared with RON 29.74 million in 2012.
Pension funds classified under Pillar II received RON 306 million in contributions in May.
Mandatory private pension fund assets (Pillar II) amounted to RON 15.46 billion (EUR 3.47 billion), according to APAPR. From May 2008 to May 2014, Pillar II funds received RON 12.49 billion in contributions through the National Public Pension House and the Sectoral Pension House of the Ministry of National Defence.
By late 2013, Pillar II fund administrators owned RON 249.6 million at Proprietatea Fund, RON 256.6 million at Petrom, RON 258.7 million at Romgaz, RON 200.5 million at Transilvania Bank, and RON 129.8 million at Transgaz.
Furthermore, mandatory private pension funds have purchased significant shares at state companies partially privatized through BVB recently.

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