Between their launch and December 2011, Pillar II funds generated net profit of almost 730 million lei (EUR168 million) for its participants (computed as net assets minus gross contributions to the system), says a press release by the Association for Romanian Privately Administered Pensions (APAPR).
In 2011, the number of participants to Pillar II grew by 330,000 compared to the previous year, to 5.52 million, in line with APAPR’s projections in January 2011. The number of new contributors in 2011 was 21.6% than in 2010, thanks to a slight recovery of the economy and on the labor market.
The net assets administered by the nine mandatory pension funds were worth RON6.42 billion, up 48% compared with December 2010.
Gross contributions transferred by the National Public Pension House to the pension funds amounted to RON1.98 billion, up 26.4% from 2010.
According to APAPR, contribution collection and density worsened in 2011. In 2010, the actual collection rate (participants who transferred contributions over total participants) was 66.4%, but it dropped to 62.8% in 2011.
The average contribution per Pillar II participant was RON49 in 2011, 26.2% higher than in 2010.
APAPR calculations indicate that the weighted average yield of the voluntary pension funds (Pillar III) between May 2007 and December 2011 was 7.3%, higher than the average inflation rate for the period, 6.1%.
Gross contributions collected by the funds amounted to RON108.3 million in 2011, above the level in 2010 – RON103.8 million and in 2009 – RON105 million.
The number of participants to this pillar was just above 260,000, nearly 39,000 more than at the end of 2010, exceeding APAPR’s forecast of 255,000 participants. The number of new entries was 12.6% higher in 2011 than in 2010.
The net assets administered by the 11 mandatory pension funds were worth RON436 million, up 34.3% compared with December 2010, but under APAPR’s expectations of RON460 million.
According to the association, about 150,000 new participants might join the pension funds on Pillar II, because of Law 263/2010 on the unitary public pension system and Emergency Ordinance 98/2011, whereby military personnel are now required to contribute to the private pension funds.
In March, the contribution to Pillar II will be increased from 3% to 3.5% of the gross monthly earnings of the participants to the system.
The extension of fiscal deductibility for Pillar III as of January 1 will slightly increase employer interest in offering voluntary pensions as a benefit to their employees.
APAPR expects the assets of Pillar II funds to increase by 45%, to RON9.3 billion, and about 340,000 new contributors to join the system, brining the number of participants to 5.85 million. Pillar III funds will have more than 300,000 participants by the end of this year, from 260,379 in December 2011, and their net assets will increase by 29%, to RON560 million, according to the association’s projections. (EUR1=RON4.3433)