Romanians May Stop Contributing to Mandatory Private Pensions after 5 Years

Romanians who contributed for at least five years to the mandatory private pension system known as Pillar II may choose to stop contributing, according to a norm issued by the country's financial watchdog ASF and published in the Official Journal.

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Under the new regulation, people who contributed to Pillar II for at least five years may halt the contribution of 3.75% of their income and direct the full 25% quota to the state-managed pensions system.

Assets amassed by contributors in the private pension system will continue to be managed by the private administrator until contributors reach retirement age and may collect their private pensions.

Pillar II funds managed assets of EUR10.2 billion for 7.25 million contributors at the end of 2018. Mandatory private pension funds in Romania had average annualized yields of 8.03% throughout the existence of the system which was started in 2008, the highest yield among similar pension systems throughout Europe.

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