Coronavirus Crisis Depreciates Pension Fund Assets

The association said the depreciation in asset value was temporary and due mainly to falls on global stock markets. In the first quarter, the Bucharest Stock Exchange fell 24%, the London and German markets fell 25% and the Paris market fell 26%.

Investment performances of Pillar II funds remain positive on the longer term (1, 3, 5 and 10 years) and the current situation is temporary, the association said, adding it expects asset values to recover once economic activity returns to normal.

The experience of previous crises shows pension funds are among the least affected by volatility because they invest assets and make payments on the long term.

“The few contributors retiring during this depreciation period are protected by the absolute guarantee mechanism which ensures a contributor’s pension cannot be lower than the sum total of their contributions minus legal commissions,” it said.

Mandatory private pension funds in Romania had an average yield of 11.8% in 2019, the highest in the past nine years. The funds, which have 7.4 million contributors, ended 2019 with net assets totaling RON62 billion, up 30% compared with end-2018.