Romania’s association for private pensions presented statistical data on the system Tuesday to mark a decade since the introduction of Pillar II.
The data showed some 75% of the assets were invested in treasury bonds and 14% to treasury bills, meaning over 90% of the money was directed to the Romanian economy.
Data centralized by the association showed the average value of a mandatory private pension account is RON5,500 and there are one million contributors with more than RON10.000 in their private pension accounts.
According to a poll by the association, three out of four Romanians expect a monthly pension of more than EUR500 (RON2,285) but only 1.03% of retirees currently earn such pensions. Also, 35% of Romanians have no savings and 36% save less than RON300 a month. Asked what prevents them to save more, 70% of Romanians cited low income and just 5% said they rely on their future state pension and don’t think they need to save.
“Romanians have high expectations about their future pensions although they cannot afford to save for retirement and the gap between expectations and realities is very large. In these circumstances, Pillar II in its current form is the only way to offer hopes of a decent pension level to millions of Romanians. Also, pension funds already play a major role in supporting the country’s economy and address a stringent need for long-term savings,” said the association president Iulius Postolache.
Earlier this year, Romania’s government criticized the mandatory private pensions system and even announced plans to eliminate it, saying the state was a better administrator of people’s contributions. Pillar II is currently mandatory and pension contributions are split between it and state pensions (Pillar I).