Romanian pension fund BCR Pensii exceeded at the beginning of April this year the threshold of RON 1 billion (or some EUR 224 million) in net assets, including mandatory or optional pensions, while having over 570,000 participants.

“The decrease in population and aging bring about three major economic effects - the economic downturn, maintain Romania’s dependency of foreign capital and higher  pressure on the state budget on long term,” according to Lucian Anghel, President of the Directorate, BCR Pensii.

According to studies conducted by the European Commission, the rate of earning replacement by public pension was of 41.6 percent in 2010 and estimations show that the rate will drop to 28.6 percent by 2060, according to a statement of BCR Pensii.

“Under these conditions, individual saving becomes a major necessity for ensuring financial resources at an old age,” said Anghel.

The state encourages saving by exempting the contribution to optional pension from taxes, thus offering employees deduction from the profit tax and from the payment social security fees of up to EUR 400 per year per employee.

The employee who contributes individually to obtain additional income in retirement also benefits from income tax exemption, in the same limit of EUR 400 per year.

“Since the launch of the optional pension system, by not taking advantage of the tax benefits granted by the state, the potential beneficiaries of these advantages lost a total amount of some RON 2 billion, an amount that was transferred to the state as tax, and not in their individual optional pension accounts,” said Lucian Anghel.

Banca Comerciala Romana (BCR) is member of Erste Group. In 2013, BCR Group posted a net profit of EUR 133.8 million, after loss the year before.

Irina Popescu, irina.popescu@romania-insider.com