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Romanian public pension system unsustainable unless occupancy rate increases

Romanian Labor Minister Ioan Botis said Thursday ,at the Mediafax Talks about Private Pensions conference that Romania's job occupancy rate has been 58% for the past 10-15 years and, unless it climbs to 64-65%, the state will be unable to pay pensions.

Botis said, in such a situation, the only solution is raising the legal age of retirement. The greatest challenge, he added, is creating jobs, otherwise the pension system will no longer be sustainable and will collapse.

According to him, Romanian private pension funds should take more risks, adding different risk levels would ensure a more efficient asset management. He said private pension funds should work with three risk levels - low, medium and high - but the bulk of assets are invested in state papers, which are low-risk. 'I wish we had this type of asset management. It would be more efficient and the benefits can be considerable. This is a great challenge for funds on Pillar II (mandatory private pensions). Currently, up to 70% of these funds invest in state papers, where risks are low,' Botis said.He explained pension funds should give clients the option of choosing the type of risk they wish to take on, adding the Labor Ministry will work on a proposition in this respect.Private pension industry representatives agreed risks should be diversified and Crinu Andanut, head of Allianz-Tiriac Pensii Private and the Romanian Association for Private Pensions consider this a priority. Adanut said Romanians need to be educated about investments.

Romania Might Discuss Lowering Social Contributions Mid-2011

Romanian authorities might discuss reducing social security contributions mid this year, Labor Minister Ioan Botis said Thursday, adding it is too soon to talk about the level of the reduction. 'In June or July, we will discuss lowering social security contributions, but it is too soon to talk about a percentage (...) It's hard to say whether unemployment contributions will be cut,' said Botis at the fourth annual edition of MEDIAFAX Talks about Private Pensions.Andreea Paul-Vass, Prime Minister Emil Boc's adviser, said in February the Government would cut social security contributions in very few months.

Sursa: http://www.actmedia.eu

Tags: private pension romanian contributions funds about botis pensions

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