Trimming the contributions to the mandatory privately-managed pension funds (Pillar II) is as harmful as the nationalization or dismantling of these funds, the more so as the law actually provides for a higher contribution than the current transfers, the Association of Participants in Pension and Investment Funds (PFP) said in a Thursday release.
“The Association of Participants in Pension and Investment Funds learned with astonishment about the latest news on Pillar II pension funds and expresses its deep disappointment at the relevant intentions of the government actors. Specifically, PFP refers to information circulated on August 23, 2017, about plans to cap the employees’ social security contribution to Pillar II pension funds at 2.5 percent,” informs the release.
Association representatives also argue that Law No. 411/2004 provides for a contribution of 6 percent but, by successive derogations along the years, the respective contributions have been maintained at a lower level (currently 5.1 percent), with each government and Parliament defaulting on promises that the respective percentage will be brought to the legal level.
The cited release also notes that transferring a part of the Romanians’ future pension under the private management of Pillar II funds was a measure designed to offset the state’s poor management.
“Thus, the Romanians will collect a pension based on their monthly contribution to the social security system. Their money can be invested and managed on their behalf and won’t be used to pay special pensions to people who don’t deserve such benefits, more less so to finance phantasmagoric investments (three-layer sidewalk kerbs, sloping sports grounds, parks in off-the-grid villages that also have no sewerage connection a.s.o.). It is not even certain that 6 percent is a sufficient contribution, but 2.5 percent is infinitely small, resulting in the Romanians losing all guarantees on their future pension,” the association representatives said.
According to information released on Wednesday by Profit.ro, the Ministry of Finance is planning to reduce the public contribution to mandatory privately-managed pension funds (Pillar II) from 5.1 to 2.5 percent. In response, the Financial Supervisory Authority argued that there is no such talk on the modification of the current way of operation of Pillar II pension schemes.