AVERAGE ANNUAL RETURN OF 16.9% The private pension system has generated an annual profit of 362 million lei

• APAPR: Pension system participants lost 750-800 million lei due to the freezing of the contribution for 2010

Private mandatory pension funds (Second Pillar) have generated a net profit of 362 million lei, in their 22 months of operation (since May 2008), net of fees, according to a press release by the Association of Private Pension Funds (APAPR).

Over the period in question, mandatory private pension funds had an annual yield of 16.9%, beating by far the annual inflation rate for the same period, which amounted to around 5%. During the last year, (February 2009 - February 2010), the annual weighted return for all the funds which are part of the Second Pillar was even greater (21.5%), compared to an estimated inflation rate of 5%.

During the first 22 months of collection, CNPAS has delivered to the Second Pillar gross contributions of 2.36 billion lei, and at the end of February 2010, private mandatory pension funds had over 2.72 billion lei under management.

So far, funds of the Second Pillar collected 2% of the gross salaries of over 4 million customers. On March 19th, 2010, the contribution will be increased to 2.5% of the gross wage. In spite of this increase, the level of the contribution has fallen below the initially scheduled level for 2010 (3%).

According to APAPR, in their 2 years during which the Second Pillar remained below the initial contribution schedule (2009 and 2010), participants in the system suffered total losses of 750-800 million lei, caused by the decision of the government to freeze the level of the contribution for 2009 and to keep the contribution for 2010 below its initially scheduled level.

"In order for participants to really benefit of the exceptional returns achieved by private pension funds, it"s imperative that starting with 2011, the Second Pillar return to the initial scheduled contribution, meaning the contribution level would be raised from 2.5% in 2010 to 3.5% in 2011, in line with Romania"s commitments to the IMF, the World Bank and the European Union", according to Crinu Andănuţ, the chairman of the APAPR.