PRIVATE PENSIONS IN ROMANIA IN THE FIRST HALF OF THE YEAR

The private pension system was the least affected by the COVID-19 pandemic, given the long-term savings and investment policy. Over time, there have been few episodes of higher volatility. These have affected private pension funds only conjecturally, their assets recording substantial year-on-year increases.

At the end of June this year, Romania's private pension system reached assets of Lei 87.70 billion, increasing by 28% compared to June last year and by 5% compared to March 2021.

As of 30 June 2021, 8.25 million participants were registered in the 17 private pension funds, with 8.07 million registered at the end of June 2020.

The investment policy in the asset portfolios of private pension funds continues to be focused on the local capital market, while the share of investments in fixed-income instruments accounted for 70% of the total investment portfolio of private pension funds, and 24% was invested in equities at the end of the first half of 2021.

Pillar II

The total net assets of privately managed pension funds (Pillar II) amounted to Lei 84.41 billion at the end of the first half of 2021, increasing by about 28% compared to the same period of 2020.

The number of registered participants in the privately administered pension scheme reached approximately 7.7 million people, compared to 7.56 million people registered in June 2020.

At the Pillar II level, the average contribution of participants with contributions paid on 30 June 2021 was Lei 208/participant, while on 31 December 2020 it was Lei 192/participant. In the period January-June 2021, contributions paid into the privately administered pension scheme amounted to Lei 4.84 billion, increasing by about 9% compared to the same period in 2020.

The weighted average rate of return of all privately administered pension funds was 6.55% in June 2021, while in December 2020 it was 5.38%.

At the end of June 2021, the average asset value of a participant in the privately administered pension scheme was Lei 10,980, an increase of 11.3% compared to December 2020. In the first half of 2021, payments of net personal assets were made to participants in the amount of Lei 129 million for 8,559 participants and beneficiaries.

The total number of participants in the privately administered pension scheme as of 30 June 2021 was 7.70 million persons, increasing by 2% compared to the same date last year.

Pillar III

Total net assets in the voluntary pension scheme (Pillar III) reached Lei 3.24 billion at the end of the first half of this year, an increase of about 24% compared to the same period last year. The number of participants, as of 30 June 2021, was 546,022 persons, compared to 517,057 persons registered as of 30 June 2020.

At the Pillar III level, the average contribution of participants with contributions transferred as of 30 June 2021 was approximately Lei 139/participant, increasing by 9% compared to June 2020. In the period January-June 2021, contributions transferred to the voluntary pension scheme amounted to approximately Lei 188 million, increasing by 4% compared to the same period in 2020.

The weighted average rate of return of all high-risk voluntary pension funds was 8.26% in June 2021, while in June 2020 it was 3.48%. The weighted average rate of return of all medium-risk voluntary pension funds was 7.07% at the end of June 2021, higher than in June 2020 (3.84%).

At the end of June 2021, the average value of an account in the voluntary pension system was Lei 6,051, 9% higher than in December 2020, while representing 55% of the value of an average account in privately managed pension funds. Between January and June 2021, net personal asset payments were made to participants in the amount of approximately Lei 51 million for 5,153 participants and beneficiaries.

More details on the development of the private pension scheme in the first half of the year can be found HERE ( in Romanian language )