Romanians' Mandatory Private Pension Constributions Set At 2.5% In 2010 - Regulator

"The draft state budged for 2010 includes an increase of the contribution from 2% to 2.5%. I do not believe the figures will change," said Giurescu during the National Conference on Private Pensions.

Contributions to Pillar II should have increased from 2% to 2.5% this year, but the the government froze them at 2% in the 2009 state budget law.

Under the law regulating private pensions in Romania, contributions to the mandatory segment were supposed to increase half a percentage point each year, from 2% in 2009 to 6% in 2016. Under the law, contributions in 2009 should have increased to 2.5%, but the Government froze them at 2% in the 2009 state budget law.

Mihai Seitan, secretary of state at the Labor Ministry, said during the conference that increases in contributions will have to be sped up and even exceed 6%.

"I don't think the contribution will rise to 3% in 2010, as the law requires, as the country's economic situation and budget do not allow such an effort. Nevertheless, increasing the contribution must be taken into account so that it exceeds 6% until 2016," Steian said.

Steian said the amendments brought to the pension law led to the emergence of other 450.000 mandatory pension contributors coming from the military and the private sectors.

Mandatory pension funds are administered by 12 companies and registered net assets worth 1.996 billion lei (EUR1=RON4.2897), up 7.89% compared to August.

The number of contributors to mandatory pensions Pillar II increased by 0,69% in September, up 4.456 million.

Under a EUR19.5 billion IMF-led loan agreement, Romania has pledged to drastically cut back on public spending and reform its public pension system. The country has undertaken to revise pension laws until December 31 through measures meant to index pensions to the inflation, limit the scope for discretionary pension increases and gradually adjust the retirement age, particularly for women, according to the IMF agreement.

Late September, the Association for Private Pensions in Romania said contributions to Romania's mandatory private pension system (Pillar II) should be at 3% of the gross wage in 2010, as set in the initial calendar, because the state pension system is "a ticking time bomb".

Romanian Prime Minister Emil Boc, whose government was overthrown Tuesday, was planning to ask a confidence vote in Parliament to enact a pension law that increases retirement age and eliminates special pensions that aren't tied to people's contributions, such as those of lawmakers, magistrates, military, law enforcement and intelligence services staff. The bill sets that all special pensions will be recalculated depending on people's contributions, which means they would be reduced.

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