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FinMin Stefan : Rumours about Pillar II getting nationalised are groundless. NN Pensions: We appreciate that FinMin and ASF had a firm point of view

Finance Minister Viorel Stefan says the rumours about the alleged intention of the Government to nationalise pension pillar II is groundless, adding that there is a no political, economic, financial or budgetary reason for such a decision.

“The rumour has no substance whatsoever. There is no political, economic, financial or budgetary reason for such a decision, which is completely absurd, regarding the pension pillar II. Pillar II is a successful financial plan. The fund administrators are getting excellent returns on investment, and the number of contributors to the plan is quickly nearing seven million,” Stefan said at the beginning of a governmental meeting on Wednesday after Prime Minister Sorin Grindeanu asked him to provide explanations about public rumours regarding the nationalisation of Pillar II pension plans.

Stefan added that Pillar II pension plans are getting stronger and stronger by the year even though transfers from the public pension fund to the privately managed pillar have stayed at 5.1 percent since 2016.

“As a result of an increase in the number of contributors because of job creation, the fund will get a surplus of 1.3 – 1.4 billion lei, which shows that it is consolidating, it is running well, and ensures that when the first generations draw pensions form this pillar those pensions will be sizeable in addition to the public pensions,” said Stefan.

He added that he held consultations with the Financial Oversight Authority (ASF) because spreading such misinformation could negatively impact the fund’s investments in financial markets.

“That is why ASF promised me that it will hold consultations today with the fund’s administrators to clarify and shoot down the rumours once and for all. So, there is no indication that anyone wants to nationalise pension pillar II,” said Stefan.

The NN Pension Fund has informed  the clients whose mandatory private pensions it manages that in recent weeks there has been public talk of a possible decision to nationalise private pension funds and recommended them to seek information on the market context.

The nationalisation of private pensions was also recently mentioned by PNL First Vice President Catalin Predoiu and vehemently denied by the Finance Minister, who called it an “aberration.” “I haven’t heard a bigger aberration than this. On the contrary, and I’ve conveyed messages in this sense, the public pension fund, Pillar I, is undergoing a process of consolidation. So, state budget transfers toward the public pension pillar are on a downward trend. So this is a very good signal, the developments are very good, so there is absolutely no reason to talk about nationalising Pillar II,” the Finance Minister said.

 

“Pillar II pension contributions to be considered this autumn with draft 2018 national budget”

 

Contributions to the privately-managed pillar II pension plans will be considered this autumn, when the draft 2018 national budget is scheduled for analysis, Finance Minister Viorel Stefan said Wednesday.

“The target is 6 percent. It is true that the contributions have been frozen at 5.1 percent for this year. The decision to increase them in 2018 will be made when we discuss the draft 2018 national budget (…) Each government did the same when the draft national budget for the next year was up for debate. So, given that this autumn we discuss the draft 2018 budget, the Government will also decide on the developments in the contributions. We will have then a clearer picture of the developments in the pillar II pension fund as well,” Stefan said at the Government House.

He added that the jobs created this year will generate additional resources to the pillar II pension fund, despite the contributions having been kept unchanged at 5.1 percent in 2017.

“Although the contributions have not increased, the pillar II will stand to benefit from additional transfers in 2017 compared with 2016, which we expect to be somewhere in the vicinity of 1.5 billion lei generated by the number of contributors joining the system as a result of an increase in the number of jobs. Given that 44,000 new jobs were created in the first two months, we are expecting 200,000 such jobs for the entire year,” said Stefan.

 

ASF’s Negritoiu: No need to discuss transformation of second pillar pensions

 

The transformation of the second pillar pension funds doesn’t even need to be discussed, declared on Tuesday evening, Misu Negritoiu, president of the Financial Supervisory Authority, at an event on the economy’s expectations for this year.

His statement followed the announcement of the NN pension fund, made on Tuesday, that it has informed its clients that in recent weeks there have been discussions in the public space on a possible intent of nationalization of the private pension funds.

 

NN Pensions: We appreciate that FinMin and ASF had a firm point of view

 

As a result of the reactions that appeared following the e-mail newsletter sent to the participants to the NN Privately-Managed Pension Fund (Pillar II), NN Pensions pointed out the following on Wednesday:

  • The content of the newsletter that NN Pensions sent to its clients is exclusively informative and does not represent a warning. The need for this notification came in response to our clients’ requests for clarification, sparked by the recent public discussions about the future of the pension system.
  • This notification came against the backdrop in which NN sends over 300,000 e-mails to its clients every month, containing information about the status of their individual pension accounts each time new sums are added, and approximately 1.9 million letters are issued to clients annually, analysing the developments registered in the previous year.
  • We appreciate that, through their statements, both the Finance Ministry and the Financial Oversight Authority (ASF) had a firm point of view regarding their support for the private pension system. These statements are gladdening, even more so if we consider that the private pension funds’ contribution to supporting the development of the national economy can grow significantly.
  • We reconfirm our commitment to serve the more than 1.9 million clients whose pension savings we are managing. That is why we distance ourselves from any political angle, irrespective of it, conferred to the message we sent to our clients on April 11.
  • We point out we will continue to notify the wider public and especially our clients, through the communication means at our disposal, about the need to save and the options to save for retirement, the context of the markets we are present on and the evolution of the savings managed by us.

 

 

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