The Romanian-German Chamber of Commerce and Industry (AHK Romania) said it supports the private pension fund system (Pillar II). The organization believes that a savings-based pension system such as the Pillar II is a necessity, given the demographic evolution in Romania.

“The companies we represent, which employ hundreds of thousands of people, consider that the current pension system, which is built on the three pillars of savings, is one that will be able to support the responsibility of ensuring an income at the end of the employees' careers,” AHK Romania said in a press release.

The organization also said the Pillar II had very good results so far, “at low costs and maximum safety for the participants.” Over 7 million people are currently contributing to the Pillar II fund, and over EUR 8.9 billion are managed in their behalf.

AHK Romania added that the pension funds and the money they manage in a private system are also important for the local financial markets.

“A modern and advanced economy needs sophisticated, liquid and stable financial markets to achieve real convergence with Western European countries. This goal would be very difficult to achieve in the absence of private pension funds and the long-term investments they make. These funds are also some of the most important holders of Romanian government securities, having an extremely important role in the financing of the current state activity and being an essential provider of short-term liquidity.”

Discussions about changes in the Pillar II system and its possible nationalization began last year when the biggest private fund manager in Romania, which is part of Dutch group NN, sent a notice to its contributors saying this scenario was possible. Liviu Dragnea, the leader of the ruling Social Democratic Party (PSD), denied any such initiative and asked the financial regulator ASF to apply harsh sanctions against the group. The NN Pensii general manager was suspended and fined RON 100,000 and the company itself had to pay a hefty fine.

The talks on this subject continued in the following months, and the idea of making the Pillar II optional also came up. However, in the last few days, the controversies around this subject have intensified after the information that the government is planning to suspend the contributions to mandatory private pension funds appeared in an official document. The PSD leader once again denied the information and Ion Ghizdeanu, the president of the National Strategy and Prognosis Commission (CNSP), said the information appeared in the official document by mistake.

President Klaus Iohannis also stepped in this dispute and asked the government to clarify its intentions for the Pillar II system. He also said the Executive should explain if it has enough money to pay salaries and pensions until the end of this year.

Irina Marica, irina.marica@romania-insider.com