Evolution of the private pension system in the first quarter of 2024

Bucharest, 9 July 2024 – The private pension market in Romania reached total assets of RON 140 billion at the end of the first quarter of 2024, up by almost 31% compared to the same period of the previous year and by 6.5% compared to the end of 2023.

As a share of GDP, total private pension assets stood at around 8.7% at the end of March 2024, marking a positive development over the past few years. In the first quarter of 2024, the volatility of unit net assets of private pension funds was moderate, with no short-term shocks.

Private pension funds are institutional investors that mainly support the local economy, while acting as a balancing and stability factor for the financial market.

Pillar II

The total assets of privately managed pension funds (Pillar II) amounted to RON 135 billion as at March 31, 2024, up by about 30.7% compared to the same date in 2023, reaching a new historical high.

The number of registered participants in the Pillar II scheme stood at 8.2 million at the end of the first three months of 2024, up slightly from 8.15 million at the end of the previous year.

At the level of Pillar II, the average contribution of participants, with contributions paid in March 2024, was about RON 358 /participant, while at December 31, 2023 it amounted to RON 276 /participant.

During the first quarter of 2024, contributions to the privately managed pension system amounted to RON 3.84 billion, an increase of about 21% compared to the same period of the previous year.

The weighted average rate of return for all privately managed pension funds was 7.51% in March 2024, up slightly from 7.39% at the end of 2023.

At the end of the first quarter of 2024, the average asset value of a participant in the privately managed pension system was RON 16,624, an increase of more than 28% compared to the same period of the previous year. 

During the first quarter of 2024, payments of net personal net assets to participants amounting to RON 302 million were made to 15,344 participants and beneficiaries.

At the end of March 2024, government securities and equities remained the main financial instruments in which privately managed pension funds invested. Private pension funds' investments in government securities accounted for 65.4%, down from 66.4% at 31 December 2023. At the same time, investments in equities accounted for 24.94% of the total value of Pillar II pension funds' assets. Assets were also invested in corporate bonds (4.81%) and investment funds (2.76%), with bank deposits and current accounts accounting for 1.28%. 

Pillar III

The total assets of voluntary pension funds amounted to RON 5.03 billion at the end of March 2024, up by approximately 30% compared to the same period of the previous year and by 6.1% compared to the end of December 2023.

The number of registered participants in the voluntary pension system as of 31 March 2024, was 736,606, an increase of 14% from the same period in 2023.

At the Pillar III level, the average contribution of participants with contributions paid as at 31 March 2024 was approximately RON 159 /participant, down by 8.5% compared to the same period of the previous year.

During the first quarter of 2024, contributions transferred to the voluntary pension scheme amounted to approximately RON 169 million, an increase of 19% compared to the same period in 2023.

The weighted average rate of return of all high-risk voluntary pension funds was 7.37% in March 2024, while the weighted average rate of return of all medium-risk voluntary pension funds was 5.95%.

At the end of March 2024, the average value of an account in the voluntary pension system amounted to RON 6,822, 14.1% higher than at the same time last year.

Between January and March 2024, payments of net personal net assets to participants amounting to RON 38.6 million were made to 2,772 participants and beneficiaries.

At the end of March 2024, government securities and equities remained the main financial instruments in which voluntary pension funds invested. Investments in government securities accounted for 65.6%, down from 66.7% at 31 December 2023. At the same time, investments in equities accounted for 26.4% of the total value of Pillar III pension funds' assets. Assets were also invested in corporate bonds (3.8%) and investment funds (2%), with the share of bank deposits and current accounts decreasing to 1%.

The report on the evolution of the Romanian private pension system in Q1 2024 can be consulted HERE.