Finance Minister Eugen Teodorovici stated on Wednesday that no contribution to the Pillar II Pension Fund is being suspended, the publishing of the bill on the Government’s website being “a syncope,” adding that the Government will come up with a new concept on private pensions “at the end of June or early July.”
“Taxpayers must know today that nothing is being suspended. The conclusions reached will be known by all. At the end of June or early July we will come up with a concrete bill, a new concept,” Eugen Teodorovici said.
The Finance Minister added that an ample discussion on the Pillar II Pension Fund will take place “in the following days or in one or two weeks.” “It will be a discussion with all data on the table, whether they are from ALDE, from PSD, from the Government’s level or from the administration, the technical side, we will all discuss, and we will publicly come out with a conclusion. The administrators of the private pensions will also take part in the talks, all actors involved will be there,” Teodorovici pointed out.
The official made the statement after a series of measures concerning the Pillar II Pension Fund – including the suspension of contributions from July 1st to December 31st, and a fixed contribution rate, set to climb from RON 84 to RON 125 and to be paid equally by both the employer and the employee – was posted on the Government’s website as part of the legislative programme for 2018. Teodorovici said this was “a syncope.”
Prior to that, Premier Viorica Dancila pointed out that an analysis on the Pillar II Pension Fund will be carried out at the Labour Ministry but that she rules out its abolishment.
Stanescu: Abolishment of the Pillar II Pension Fund was never considered. Unfortunate communication from the Prognosis Commission
Deputy Premier Paul Stanescu explained on Wednesday that the suspension of the Pillar II Pension Fund was never considered, adding that the Government should explain what this pillar means and whether the future pensions will be higher or lower. He added that the bill on the suspension of contributions to the Pillar II Pension Fund was “an unfortunate communication” on the part of the Prognosis Commission.
“I say it again: the suspension of the Pillar II Pension Fund was never considered. Such a thing was never considered, it was only a proposal from the Prognosis Commission. Moreover, in my opinion, and I said this publicly, the Government must explain very well what the Pillar II Pension Fund means, for the generations that switched to the Pillar II without anyone asking them anything. I would like to know whether my pension will be higher or lower. The Government should explain it to me, and Ms Olguta Vasilescu will probably explain it in the upcoming period. I repeat, this must be optional, because it was generated by someone from the Prognosis Commission, simple.”
Likewise, referring to the statement that former Finance Minister Ionut Misa made on 20 June 2017, according to which the abolishment of the Pillar II Pension Fund was being discussed, Stanescu replied: “I haven’t heard anyone, and no discussion, within the PSD at least. I don’t know about the Coalition. (…) An unfortunate communication from the Prognosis Commission.”
He added: “It was a communication from someone, without realising what they were saying. The abolishment of the Pillar II Pension Fund was not discussed within the PSD.”
“Pillar II will be abolished. The money will go back to those who contributed to it, with them having the possibility to opt for the social securities budget or for Pillar III, the private one. They will choose whether their money will be administered by the state or by the private sector. We haven’t set a timetable, we plan [to do it] toward the end of the year. (…) The Pillar II Pension Fund administers assets of around RON 40 billion. However, the pension that each taxpayer would benefit from is of around RON 25 per month,” Misa stated back then.
Following that statement, PSD leader Liviu Dragnea said that the scandal over the nationalisation of private pensions started from Financial Supervisory Authority (ASF) President Misu Negritoiu who knows very well that in a short while Parliament will sack the ASF leadership because what is happening at the ASF is “very grave” and insured Romanians stand to suffer.
Back then, Dragnea added that “the Romanian Government should ask the Dutch embassy, the Dutch Government and the leadership of ING Netherlands for explanations, because what this insurance company has done in Romania maybe it could have done in some Dutch colony or former colony.”
AHK: Pension system based on saving such as Pillar II, necessity in current demographic circumstances
A pension system based on saving, such as Pillar II, represents a necessity, if we take into account Romania’s demographic evolution, confirmed by the forecasts carried out by the international bodies, the representatives of the Romanian – German Chamber of Commerce and Industry (AHK Romania) consider in a press release issued on Wednesday.
“This [Pillar II, ed.n.] will contribute, alongside Pillar I, to improving the pensioners’ quality of life. The companies we represent and which hire several hundred thousand people consider the current pension system, built on the three saving pillars, is one that will be able to support the responsibility of ensuring an income at the end of the employees’ career. Romania’s Private Pensions Pillar II has generated good results since its establishment to the present moment, with reduced costs and maximum security for participants, the Romanians who make savings through Pillar II being guaranteed the value of their net contribution wired throughout the entire saving period, irrespective of the evolutions of the financial markets,” the release specifies.
According to AHK, over 7 million people currently save money in the Private Pensions Pillar II, in whose name over 8.9 billion euro are being managed.
The representatives of the German investors in Romania mention at the same time that the pension funds and the money they manage privately also bear special importance for the local financial markets and a modern and advanced economy able to reach a real convergence with countries in western Europe needs sophisticated, liquid and stable financial markets.
“This aspiration would be difficult to achieve in the absence of privately managed pension funds and the long-term investments they carry out. These funds are some of the most important government securities’ holders, playing an extremely important role in financing current activities of the state and being an essential provider of short-term liquidity. Romania is a country with a poorly developed financial market and reduced levels of saving money. Only the existence of institutional investors such as private pensions funds can bring the stability the local financial market will need to develop in the future,” the quoted source underscores.
The Romanian – German Chamber of Commerce and Industry (AHK Romania) officially represents the German economy and at the same time the largest bilateral Commerce Chamber in Romania. Established in 2002, the Chamber has over 600 member firms and provides companies with an important platform for networking, exchanging information and experience.