Optional pension funds in the finishing straight

The optional pension fund law is on the home straight, but it is still not clear who will be those that will be able to contribute to such funds.

At the moment, there are 4.5 million employees in Romania, who contributed to the public pension system, and 5.5 million people who are working but are not employed by a formal employment contract, such as small entrepreneurs, authorised professionals, people collecting royalties from their work, as well as people that were hired without the legal employment formalities being completed.

“The optional pension system allows anyone to participate, even those that do not contribute to the public social security system. Optional pension funds have nothing to do with the public pension system,” stated Mihai Seitan, chairman of the National Pension and Social Security Office (CNPAS), during the “Private pensions on the finishing straight” seminar organised by ZIARUL FINANCIAR and ING Asigurari.

Still, the law is not as clear as that. The categories of people living exclusively off rents, dividends or making other forms of income other than a regular salary and professional related income, that is those that work abroad or get an income from royalties, are not included in the text of the optional pensions law, which generates confusion as to their right to participate in an optional pension scheme.

Furthermore, the law stipulates the maximum contribution level for optional pensions to be 15% of the gross salary income per month, or of the salary-like income of the person that contributes to the pension fund, but does not say how this contribution is to be computed for those persons that do not have one fixed stream of income.

“I believe anyone must have the right to contribute to the optional pension fund. Even he who sells one sheep per month to pay for his contribution,” stated Theodor Stolojan, economic advisor of the President of Romania. Stolojan says that state-owned monopolistic companies should not be allowed to contribute to the optional pension system of their employees.