About seven million Romanian workers will suffer a significant reduction in their future pensions following the reforms the Government has approved this month, the Financial Times reports.

Romania has decided to diminish the contributions to private pension funds because the Government strives to meet its ambitious promises of tax cuts and wage increases without breaching the EU budget deficit limit, namely 3% the gross domestic product, according to FT.

"Romania has been able to set up excellent private pension schemes and should not start to cut them down by lowering the level of government contributions," said Janwillem Bouma, president of PensionsEurope, a Brussels-based pension fund association.

In the beginning of November, Romania’s Government decided to cut the social contributions transferred to the mandatory pension funds on behalf of the employees from 5.1% to 3.75% of the gross wage.

Romanians paid RON 5.9 billion (EUR 1.2 billion) to the private pension funds in 2016. People up to 35-year old are obliged to direct 5.1% of their gross wage to the mandatory private pension funds every month. The contribution is paid to the state, which then transfers it to the private pension fund chosen by the employee.

editor@romania-insider.com