AIG Life to invest 10 million euros in private pensions

AIG Life, the second-largest insurance company in Romania, estimates it will invest about 10 million euros to establish a company that manages private pension funds.
“We are directly interested in participating to both pillars of the pension system (pillar II is made up of privately managed mandatory pensions and pillar III of the optional pensions i.e.). We are preparing to manage pension funds, by allocating human and financial resources, and will establish a separate company for pillar II,” stated Theodor Alexandrescu, general manager of AIG Life.
The law states that companies that manage pillar II pension funds are required to have at least 4 million euros in share capital.
“We will make the biggest investment in the development of the distribution network, of the systems and logistic infrastructure. These systems alone cost several million euros,” Alexandrescu explains.
Other companies that announced they were interested in managing private pension funds are ING Asigurari de Viata, Generali, Allianz-Tiriac, Certinvest, Ardaf, Aviva, Interamerican and Delta Asigurari, whose shareholders include the SNP Petrom Employee Association run by Liviu Luca.
Authorities say the first contributions to the optional pension system (pillar III) will be possible to make as of January 1, 2007. Anyone deriving income from professional activities will be allowed to contribute to these pension funds, with the monthly contribution set at no more than 15% of the gross monthly salary.
Officials estimate that pillar II will become operational at the beginning of 2008 at the latest. Those that will mandatorily contribute to the pillar II pension funds will be those people aged up to 35 years, who contribute to the public pension system. The initial contribution will be of 2% of the monthly contribution to the public pension system, and will go up by 0.5% a year, to 6% in eight years.
Insurance companies, investment management companies and companies established specifically for this purpose will be allowed to manage pension funds.