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Empty private pension accounts up 27 pc in April 2009

The growing unemployment and bankruptcy rates and the increasingly frequent use of fiscal credit have reduced the number of private pension accounts into which payments are made every month, and the weight of the so-called empty accounts has grown from 23 per cent in May 2008 to 27 per cent in April this year, according to APAPR data.

‘All these crisis effects are nevertheless compensated by wage rises and by the unexpectedly large number of new subscribers joining the compulsory private pension system (Pillar II), which leaves the monthly volume of contributions subscribed to funds unaffected', reads an analysis made by the Association for Privately Managed Pensions of Romania (APAPR), presented during a press conference yesterday, Agerpres informs.

Under the law, two per cent of the total social security subscription representing 9.5 of an employee's gross income will be privately managed in the first year of activity - 2008. The share is set to reach six per cent over a period of eight years. The subscription was supposed to be increased by 0.5 per cent to 2.5 per cent this year, but the social security budget law for 2009 did not include the sum necessary to sustain the increase. Practically, the subscription to Pillar II is calculated by applying the 2008 quota. As far as facultative pensions are concerned (Pillar III), the APAPR analysis shows the number of people opting for the system is much smaller than the initial estimations and even than the revised ones, as well as a slower accumulation of managed assets.

APAPR also identifies a slight, yet noticeable reduction of the rate of Pillar II subscription collation, primarily from individual clients, and the still low level of assets leads to a shortage of opportunities to diversify investments made by fund managers, for which reason yields have been so far worse than those obtained by Pillar II. The 14 pension funds within Pillar II last year had an average weighted yield of seven per cent or an annualized yield of 11.3 per cent (above the May-December 2008 inflation rate of 6.3 per cent).

Eur 10 m spent on informing subscribers

Compulsory and facultative pension fund managers have spent about EUR 10 M on the 4.7 M information letters sent to subscribers every year, AIF Fond de Pensii CEO Mihai Coca-Cozma says.

‘Nearly EUR 5 M have been spent on paper as such and about EUR 5 M on postage fees', said Coca Cozma. The Annual information letters had been sent out before April 15. They contain details on personal accounts, previous year's subscribing history, state of play of the pension fund and the circumstances of the company that manages the pension fund.

 

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Tags: pillar april accounts pension private

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