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September 24, 2021

CSSPP: Pensions worth a maximum 15 pc of the last salary, for the ‘66-’71 generations

The present resources of the state pension system will provide to those born during 1966-1971 pensions of maximum 15 pc of their last salary, warned the vice-president of Private Pension System Supervisory Commission (CSSPP), Ion Giurescu said in the seminar ‘Five years of compulsory private pensions,’ organised by Ziarul Financiar. He added that the only feasible solution is giving the active young generations an opportunity to save part of their incomes, in a system based on individual accounts and continuous reinvestment. The first contributions to the system of compulsory private pensions (Pillar II) were paid in May 2008. Compulsory pension (Pillar II) funds had an average yield of 11.54 pc during May 2008 – August 2012, calculated by placing the average value of fund units in relation with the value at the beginning of the programme, according to the Privately Managed Pensions Association of Romania (APAPR).CSSPP data show that, at the end of August, there were 5.7 million contributors to the Pillar II, with cumulated pension accounts worth EUR 1.9 bln. The average value of an active Pillar II account amounts to EUR 562. Together with facultative pension funds (Pillar III), the private pension system has assets worth EUR 2 bln. According to Giurescu, in Romania the percent quota applied to the sums paid to the system of compulsory pension funds (Pillar II) – currently 3.5 pc – is the lowest in Europe. He added that the sums contributed to Pillar II will not cover the financial needs of retirees.In his turn, Mircea Oancea, the deputy general manager of CSSPP said that the number of mandatory private pension funds (Pillar II) will decrease from 9 to 6 in the next 5 years, through acquisitions and mergers. When Pillar II became operational, in May 2008, contributions were being paid to 14 funds, of which only 9 are still active now.On the same occasion, the president of the National House of Public Pensions (CNPAS), Ileana Ciutan said that the number of active contributors in the system amounts to 4.7 million, while there are 5.7 million recipients of benefits in the public system, which means a “worrying” ratio that explains the deficit of the pension budget and the fact that, sometimes, the state must contribute to supporting the public pension system.

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