Romania’s 6.5 million future pensioners, who are currently contributing to mandatory private pension funds, will lose about EUR 200 million if the Government doesn’t raise the contributions to the private pensions above the current level of 5%, according to the Romanian Pension Funds' Association (APAPR).

Several mass-media sources have reported that the contribution of the social insurance state budget to the private pensions will remain at 5% of the gross wage in 2016, reads an APAPR press release.

According to Profit.ro, the current draft budget for 2016 doesn’t include the necessary amounts to raise the contribution to the private pension pillar from 5% to 5.5% of the gross wage, as previously stated. The contribution paid from the budget to private pension funds should reach 6% in 2016, according to a law from last year.

The state collects a social security contribution of 10.5% of the gross salary of all employees in Romania. The state then forwards a part of this contribution to private pension funds and keeps the rest to pay the pensions of the current pensioners.

However, as the level of contribution to private pension funds has been increasing each year, the state has had less resources to pay the current pensions, so the social security budget has had ever wider deficits which needed to be covered from other sources.

editor@romania-insider.com