Seitan: Companies can cut expenses by granting private pensions to employees

The financial crisis could stimulate companies to grant voluntary pensions (3rd pillar) to employees, because contributions to pension funds are deductible from the profit tax and, starting next year, will also be exempt from payment of social security contributions, according to Mihai Seitan, former president of the National Pensions Office, and one of the people who reformed the Romanian pensions system, by introducing private funds. ‘If the crisis continues into 2009, many companies will want to offer voluntary pensions to their employees, because this allows them to cut down on taxes and because it is more profitable to give employees private pensions than bonuses,” says Seitan. As of 2009, the deductibility of contributions paid for voluntary pensions will increase to 400 euros per employee and 400 euros per employer, i.e. 800 euros in overall sum, double the current value. The process of selling voluntary pensions to individuals could, however, become more difficult, because their perception of the financial system is deteriorating in the context of the crisis.