Fiscal Code modification brings 300,000 new clients to private pensions system

The introduction of social security payment for sole traders and for those who derive income in the form of royalties is a breath of fresh air for private pension funds, in the context where it will bring them 200,000-300,000 new clients, as estimated by fund managers.

At present privately-managed pension funds (2nd pillar) have around 5 million clients. Normally, in order to attract a few hundred thousand new clients, pension funds need to wait a year or more. Around 15,000-25,000 new participants join second-pillar pension funds monthly.

“We will have a few hundred thousand new participants to the 2nd pillar (in the whole market i.e.), probably two-three hundred thousand, this is good news for the private pensions system. We cannot quantify the impact of the Fiscal Code modification, there are no precise statistics, but this is definitely a breath of fresh air, after being threatened with cutting the contributions,” says Simona Dițescu, general manager of BCR Pensii (BCR Pensions).

The modification of the Fiscal Code to expand the tax base by including CAS (pension contribution), CASS (healthcare contribution) and the unemployment contribution for sole traders and for those receiving royalties, entered into force on July 1st, but there were no enforcement guidelines until the beginning of this week. Some of those receiving royalties or acting as sole traders also have an employment record, which means they will not join the private pensions system as newcomers, but will pay higher contributions as a result of the higher income to which the pension contribution is applied.