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September 30, 2022

Pensions system controversies continue. FinMin: Teodorovici: Scenarios concerning pensions, made by those who have no clue, generate negative effects

Finance Minister Eugen Teodorovici stated on Tuesday, at the Palace of Parliament, that the scenarios concerning pensions, made by people who do no know what the Government is doing, generate negative effects. The minister also stated that all ministries are working on the analysis announced by the Premier.

“Work is being done at the Labour Ministry, together with other ministries, the Finance [Ministry] and other institutions involved, the ASF and others,” Minister Eugen Teodorovici stated when asked about the Pillar II Pension Fund analysis set to be carried out by the Labour Ministry, not the Finance Ministry as the Premier announced.

“The transfer of contributions has led, this year, to a reduction in the pension fund deficit to 7-8 billion lei, from sums that had reached even 18 billion lei in previous years. This shows a correct trend. Any scenarios regarding the pensions system made by people who have no clue about what is normal, correct, and about what the Government is working on, generate negative effects in the costs of loans, which the Finance Ministry must pay in the market. We must think whether such statements made by politicians, one more unjustified than the other, shouldn’t be censured in line with the law,” Teodorovici added.

Asked whether the transfer of contributions will be suspended, Eugen Teodorovici stated that all possible scenarios are being analysed.

“All those I talked with, the Prime Minister and Mr Dragnea too, have said very clearly that an analysis is being made, a discussion of all possible scenarios. What comes out of this discussion will definitely be attractive for those who contribute. It’s premature to discuss beforehand or to make all kinds of scenarios, an analysis is being made. (…) My plea is that we should sit, analyse, and discuss when the Government has a clear concept, when it publicly presents it, with all actors involved. Nobody has any intention of doing something covertly, of unpleasantly surprising someone,” Teodorovici said.


PNL Senator Florin Citu: Abolishment of Pillar II reintroduces employer’s contributions. It’s the equivalent of introducing a tax on labour


PNL Senator Florin Citu stated on Tuesday that the abolishment of the Pillar II Pension Fund is reintroducing employer’s contributions, thus raising the cost of the labour force for employers.

“The bill that “regulates” – in fact abolishes – the Pillar II Pension Fund hides yet another bombshell. It reintroduces the employer’s contributions and it implicitly raises the cost of the labour force for employers. It’s the equivalent of introducing a tax on labour. I quote from the bill regulating the privately-administered mandatory pensions of Pillar II, the proposed bill, the employer’s contribution appears, which says: ‘the employer’s contribution is equal to that of the employee […] based on the size of the company,’” Florin Citu stated for Mediafax.

The PNL Senator claims that this will cause a budget shortfall.

“After they transferred the contributions, that fiscal stupidity that saw all contributions transferred to the employee, now the employer’s contribution reappears, and the employee’s contributions remain. I believe all employers in Romania must be aware that this will happen sooner or later, that’s how big the budget shortfall is. (…) We do not yet know the budgetary impact, because we do not have the exact figures, but it should mean a plus for the social securities and healthcare contributions budget,” Citu added.


Deputy PM Stefan: Gov’t didn’t initiate demarche to amend Pension Pillar II regime


Deputy Prime Minister Viore Stefan stated on Tuesday that the Government didn’t initiate any demarche for amending the regime of the Pension Pillar II.

“My standpoint in respect to the Pension Pillar II was made public. (…) There is no draft law, there is only a great deal of concern in the public debate, which makes me happy, giving this daft is being talked about. But I reiterate the fact that the Government didn’t initiate any demarche for amending the Pillar II regime,” Viorel Stefan mentioned at the Parliament Palace, when asked by journalists about the existence of a draft law on the Pension Pillar II.


Dragnea: There is no Government or Coalition decision to abolish the Pillar II Pension Fund


On Monday, Social Democratic Party (PSD) President Liviu Dragnea stated there is no Government or Coalition decision to abolish the Pillar II Pension Fund as had been publicly rumoured. Nevertheless, Dragnea said that there could be a suspension if the pending analysis shows the need for it.

“Governance is exercised based on a programme. The undertaken objectives are: that in the following period the Labour Ministry would finalise a rigorous analysis of the financial data, in order to be able to present to citizens the financial information regarding the pension level that a Romanian citizen will have for Pillar I and II. The second is for the informed Romanian citizen to have the possibility to choose Pillar I or II, or both. No decision has been adopted within the Government, party, coalition, that would include… a decision that would result in the abolishment of the Pillar II Pension Fund hasn’t been discussed, is not being discussed, and we will not adopt it. I respectfully ask that deceitful information not be rolled forward,” PSD President Liviu Dragnea stated.


PM Dancila: I rule out the fact that we might dismantle Pension Pillar II


Prime Minister Viorica Dancila ruled out on Monday the fact that the Government might dismantle Pension Pillar II.

“I rule out the fact that we might dismantle the Pension Pillar II (…) An analysis will be carried out at the Labour Ministry regarding the Pension Pillar II, but it will not be dismantled,” Dancila stated.

Likewise, the information regarding the abolishment of Pillar II Pension Fund were dismissed on Monday by the head of the National Prognosis Commission too.

“The pieces of information regarding the suspension of payment to the Pension Pillar II were just discussion scenarios published by mistake and the authorities gave assurances that such thing won’t happen as of 1 July”, head of the National Prognosis Commission (CNP) Ion Ghizdeanu told Agerpres.


Iohannis: I summon governing people to clarify once and for all their intention on Pillar II


President Klaus Iohannis said on Monday that he is summoning the governing people to clarify once and for all what their intention regarding pension pillar II is, given the “ping-pong of statements” made on this subject.

“I have noticed, I admit, with much concern what is going on and not only now. (…) I believe that right before the oath-taking of I don’t know which PSD [Social Democratic Party, ed.n.] government, I think Tudose Government, at the hearings in Parliament, someone had made the statement that Pillar II was to be dismantled. Since then a ping-pong of statements has occurred: it will be dismantled, it will not be dismantled, it will be nationalized, it will not be nationalized, it will be suspended, it will not be suspended.

This approach is very, very worrying and it already is at the limit of a dilettante, very toxic governing, and I urge the governing people to clarify once and for all what their intention for Pillar II is, because this is not about public money, it is private money, it is the money of the people who contribute to Pillar II, and you cannot play with that. On the other hand, here we are dealing with a matter that needs to be clarified and planned in the long run. No one pays a pension contribution to receive the money the next day and the greatest risk I see here is that people lose confidence in the state’s ability to design and manage the pension system and the people are already asking questions. (…) This needs a firm clarification, I hope a clarification in the sense that PSD does not touch that money and then things can be further built upon,” Iohannis said.

“This pillar was designed, the related legislation was created and people started to pay, believing that when they retire, they will benefit from a supplementary pension. If now, only a few years later, someone starts changing the functioning principle of Pillar II, starts to change the legislation, the whole thing will fall apart,” the head of state said.

“If I remember well, there was someone from PSD who had ideas for modifying Pillar II, an analysis was carried out in 2013-2014 and it was found that these funds had a good yield and then the idea to change things was abandoned. Now, after a few years, the debate is resumed and no architecture can be built in the field of pensions where every two or three years someone who happens to govern starts to question everything,” concluded Iohannis.

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