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September 25, 2022

AmCham Romania calls for preservation of Private Pensions Pillar II

The American Chamber of Commerce in Romania (AmCham Romania) expresses its support for preserving the current private pensions framework, that proved a fundamental prerequisite for improving the living standards of the future Romanian retirees, according to a release issued on Tuesday.

“On behalf of its over 430 members, US, international and Romanian companies that ensure through their operations the income for over 250,000 Romanian employees and their families, the American Chamber of Commerce in Romania (AmCham Romania) expresses its concern regarding possible measures and public policies that could affect the wealth of the employees during their career and retirement period, and that could at the same time reduce the development potential of the Romanian financial market. In this context, AmCham calls for preserving the current private pensions framework, an insurance system that proved its long-term sustainability and which represents a prerequisite for improving the living standards of the future Romanian retirees,” reads the release.

According to the quoted source, over 7 million Romanians have accumulated savings amounting to approximately EUR 9 billion through the Private Pensions Pillar II in the first 10 years of the system’s functioning, 15 percent of this amount representing the benefits of the investments placed by the private pensions administrators.

The AmCham Romania reiterates the need to put an end to political measures “that sacrifice long-term objectives, in this case, the wealth of the future generations of retirees, to compensate short term budgetary needs. The additional revenues to the public social insurance budget through a potential cancellation of the private pensions’ contributions, will in fact have significant negative consequences.”

“We believe that long-term saving is the only sustainable solution, and is a must for the Government, Parliament and all the relevant authorities to understand the long term implications that such change could have on the economy at large, on Romanians’ present and future quality of life, especially with the private pensions system being the only saving instrument that most Romanians contribute to. The AmCham Romania outlined its position advocating for the preserving of the Private Pensions Pillar II, in a dedicated letter submitted to the Romanian Government jointly with the Foreign Investors’ Council, and continues to call for genuine consultations before adopting any related decision on this topic.

Public Finance Minister Eugen Teodorovici stated in mid-April that the mechanism for transferring the pension from the Pillar II to Pillar I might be on the Gov’t’s table by the end of the first semester of this year.

At the end of last year, the Gov’t adopted an emergency ordinance which cuts the contribution to the Pillar II to 3.75 percent of the gross wages, starting 2018 from 5.1 percent.

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