Pension fund yields after 11 months in business

Mandatory private pension funds (2nd pillar) recorded a 12.8% average yield, twice as high as the inflation rate in this period, of 6.45%. Six of the 14 pension funds on the market had an over 10% yield in the May 2008 – April 2009 period. They also account for the biggest market share – 81% of the overall participants to the 2nd pillar, and they hold 84% of the overall net assets. For comparison’s sake, according to the latest data published by the NBR (National Bank of Romania), the average interest rate on the population’s deposits is 9.94% – for already existing deposits and 13.73% for newly set up deposits. However, the annualised yield of pension funds amounts to as much as 17.86% for the ING pension fund, which also has the biggest number of participants, 1.45 million Romanians. Only 5 of the 14 pension funds recorded a yield below the inflation rate. The Group for Applied Economics has initiated a draft law whereby the managers would be required to guarantee an annual minimum yield equal to the inflation rate. However, the Association of Financial-Banking Analysts in Romania, the Association of Financial Analysts (CFA Romania) and the Association for Privately Managed Pensions in Romania challenge this guarantee.