The law on occupational pension funds was published on Tuesday in the Official Gazette. This creates the legislative framework allowing the first private pensions to benefit from expense deductibility, but the insurance companies that are expected to invest in this system are less than enthusiastic about it.
“Parliament did not take into account any of the observations made by the insurance industry. This law is discriminatory as it only addresses employees, imposes upon managers a share capital that is too high for the potential market ($2 million) and is unclear in many respects, particularly as regards the calculation of the minimal yield or solvency,” says Tudor Moldovan, chairman of Asociatia pentru Pensii Administrate Privat din Romania (The Romanian Association of Privately Managed Pensions – APAR) and executive manager with insurer Generali Asigurari.
By allowing the deductibility of 200 euros per employee and 200 euros per employer, the law supports the right for private pensions, but at a collective level, “at the level of units.”
According to the law, “the employer and trade union can jointly propose to employees that they participate in an optional scheme of occupational pensions, through the labour contract at the level of the unit, unit group or branch.” In case there is no such contract, nor any trade union, schemes “can be proposed by the employer following consultations with employees”.
The law is discriminatory since those who do not have a work record do not benefit from any deductibility, either for expenses linked to private pensions, or for any other form of saving, explained Tudor Moldovan.
Due to the development of the service sector, the number of persons working without having the status of employees (including entrepreneurs, insurance or real estate agents) has been increasing lately.
Given the absence of a legislative framework, insurance companies have so far sold over 100,000 “private pension” policies, developed by modifying existing life insurance policies. However, the law makes no reference to those who have purchased such policies, nor is there any draft law in this respect.
Adrian Allott, financial manager with the insurance company Aviva, says that the passing of a law for this third tier of private pensions, namely for optional private pensions, is “unusual”.
“I doubt there will be a sufficient number of customers for this type of additional private pension,” Allott said. The other Eastern European countries first set up privately managed public pension funds (second tier), collecting part of the money currently paid at the National Pensions Office (first tier).
sorin.pislaru@zf.ro