Romanian mandatory private pension funds returned an average 8.7% in 2014, as they invested most of their assets in Romanian state bonds, corporate bonds, and shares listed on the Bucharest Stock Exchange.

The average return of the private pension funds was close to the 9.1% gain posted by the main index of the Bucharest Stock Exchange, BET, in 2014, and more than double compared to interest rates on bank deposits made in the beginning of 2014.

The total assets of the seven mandatory private pension funds (Pillar II) went up by 37% last year, to EUR 4.26 billion, mainly due to new money coming in from social security contributions (CAS). The total number of participants in these funds was almost 6.3 million.

All employees in Romania contribute to mandatory private pension funds, as a part of their social security contributions (CAS) is  automatically transferred to these funds.

Mandatory private pension funds were launched in Romania in May 2008 and since then they received EUR 3.38 billion via contributions and added EUR 867 million gains following investments.

The optional private pension funds (Pillar III) had an average return of 7.45% last year. These funds totaled EUR 232 million in net assets, 28% higher than at the end of 2013. They had 345,000 contributors.

Andrei Chirileasa, andrei@romania-insider.com