Romania’s privately-managed pension funds need more alternatives for investments, as the Bucharest Stock Exchange (BVB) has remained much behind the private pension system in terms of development, according to Radu Crăciun, president of the Romanian Privately-Administered Pensions Association (APAPR).

Without new investment opportunities, the mandatory private pension plan known as Pillar II, which has roughly 7.8 million participants contributing part of their monthly paycheck, will remain inefficient, Crăciun warns.

“The private pension system in Romania is like a Formula 1 car that we’re driving through Bucharest. From time to time we complain that it consumes too much fuel, that it’s too large to park. As long as we drive it through Bucharest, the Formula 1 car will remain inefficient,” he said, quoted by Economedia.

Investment managers like Crăciun argue for diversified opportunities for investment, allowing, for example, pension funds to invest in Romanian private enterprises that are proven to have a successful business model.

Romanian pension funds have invested roughly a quarter of their money on the Bucharest Stock Exchange, which has shown some resilience despite troubled economic times. That is because, as Crăciun says, a lot of companies listed there are in the energy sector, which has thrived in the last months.

“However, liquidity is low, and the constant interest of pension funds for local stocks helped stabilize the market,” he added.

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radu@romania-insider.com