The evolution of the private pension system in 2018

Bucharest, March 15th, 2019 - The value of total assets under management, at the level of the entire private pension system reached 49.60 billion lei (EUR 10.64 billion) at the end of last year, increasing by 19.40% compared to the previous year.

The share of private pensions in Gross Domestic Product was 5.22% at the end of last year compared to 4.84% in December 2017.

At 31 December 2018, the largest share in the structure of private pension funds' portfolios was held by government securities by 63.62%, the other instruments accounting for the following shares: 17.56% shares, 8.11% bank deposits, corporate bonds 3, 53%, non-governmental foreign bodies bonds 3.39%, participation shares 3.01% and other financial instruments 0.78%.

Privately managed pensions (Pillar II)

The total value of net assets, registered at December 31st, 2018, of privately managed pension funds was 47.58 billion lei (10.20 billion euros). The annual growth rate recorded was 19.72%.

At the end of last year, 7.25 million participants were registered in the privately managed pension system, almost 3% more than in 2017.

At Pillar II level, the average contribution of the participants, with contributions paid at December 31st, 2018, was 159.75 lei.

The nominal rate of profitability of privately managed pension funds was, at December 31st, 2018, 2.72% versus 3.95% on December 31st 2017.

Also, at the end of 2018, the average value of an account in the privately managed pension system was 6.671 lei (1.430 euros), 16.07% more than the end of 2017.

At the end of December 2018, 5.71 million participants (80% of the total) held in their account up to 10,000 lei and 1.43 million participants (20% of the total) had over 10,000 lei in the account, and of them 300,000 participants (4.24% of the total) had over 25.000 lei in the accounts.

In the year 2018 payments of the net personal assets to participants were carried out, amounting to 51.74 million lei for 6,837 participants and beneficiaries, of which 36.15 million lei as a result of the pension entitlement, representing 68.88% of the total payments made ( 3.463 participants), 14.91 million lei as a result of the death of the participant, 28.81% of the total (3.244 payments to the beneficiaries) and 680.000 lei as a result of invalidity, 1.31% of the total (130 participants).

Optional pensions (Pillar III)

The net assets of optional pension funds amounted to two billion lei (EUR 0.43 billion) on December 31st, 2018, with an annual advance of 12.18%.

At the end of last year, 472,160 participants were registered in the optional pension system, 5.83% more than in the previous year. At December 31st, 2018, the average contribution per participant was 60.29 lei, 6.83% higher than in December 2017.

As of December 31st, 2018, compared with December 31st, 2017, the nominal rate of profitability of optional pension funds belonging to the medium risk category decreased from 3.19% to 1.60% the nominal rate of profitability of optional pension funds belonging to the high-risk category decreased from 4.87% to 2.58%.

The average value of an account of participants in the optional pension system was, at December 31st, 2018, 4,567 lei (979 euros), increased by 6.42% compared to the same period of 2017.

In the year 2018 payments of the net personal assets to 7,851 participants and beneficiaries amounting to 58.15 million lei, were carried out, out of which 54.86 million lei were due to the opening of the pension entitlement, representing 94.34% of the total payments made (6,866 participants ), 3,11 million lei due to the death of the participant, 5,36% of the total (951 payments to beneficiaries) and 0,17 million lei due to disability, 0,30% of the total (34 participants).

A detailed analysis of the private pensions market in Romania on December 31st, 2018 can be found HERE.

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