Romania's Constitutional Court rejected the objections against the emergency ordinance by which the Financial Supervisory Authority (FSA) amended the functioning of the private pension system, such as eliminating the fee charged for each monthly payment made by contributors and establishing a single commission instead, Ziarul Financiar reported.

The law is supposed to be promulgated by President Klaus Iohannis.

The objections were raised in February 2023 by the reformist party USR and Forta Dreptei/Force of the Right (of former prime minister Ludovic Orban), who claimed that "the law will cause losses to private pension fund managers and will determine their withdrawal from Romania."

Romania's Chamber of Deputies adopted, on February 21, as a decision-making body, a project to approve an emergency decree that brings important changes to the functioning and management of private pension funds.

Representatives of the opposition, such as MP Ionel Dancă, criticized the amendments, claiming that the pension fund managers would exit the market since "their revenues would drop by 20% and they would be forced to invest in state-controlled companies."

There are, however, positive impacts from the new regulations for the fund managers, whose revenues have not really been linked to their results so far. Under the new regulations, the fund managers will be allowed to charge only a management fee calculated based on assets and furthermore linked to the fund's performance, but no fee will be charged on the monthly contributions (not linked to the fund's performance).

(Photo: Jeanette Teare/ Dreamstime)

andrei@romania-insider.com