Private pension funds see recovery in 2010

Even though the contraction of the economy was felt strongly last year by the Second Pillar of the mandatory pensions, leading to the low number of participants and the drop in collected pensions and the reduction in raised amounts, the private pension funds have succeeded in growing over the last year, according to the latest financial stability report published by the NBR.

The investment portfolios of the private pension funds include mostly lower risk fixed income instruments. Fixed income instruments account for more than two thirds of the total portfolios of private pension funds, with state bonds holding the largest weight.

Unlike in 2009, in the first months of 2010 the revenues of the private mandatory pension funds have increased due to the raise of the contribution to 2.5% of the gross wage, as well as due to the stabilization of the economy.

At the end of H1 2010, the Second Pillar had a number of 5,055,102 persons, up 2.9% over December 2009 and up 5.9% YOY.

In June 2010, mandatory private pension funds had net assets of 3.4 billion lei under management, whereas the net assets under management of the optional pension funds only amounted to 264 million lei, according to data published by the NBR.

Still the optional pension funds sector (Third Pillar) has recovered slightly this year, and succeeded in attracting 5,300 new customers in July, a 40% increase MOM. In June, the 13 domestic optional pension funds have successfully attracted just 3,700 new customers, and even less in May 2,000 customers. According to data from the Commission for the Surveillance of the Private Pension System (CSSPP), at the end of July, optional pension funds had over 207,200 participants.

The largest pension fund managers are ING, Allianz-Ţiriac and Generali. These funds were launched at the end of 2007, with an initial investment of more than 500 million Euros. The contribution to the Second pillar currently stands at 2.5% of the gross monthly income.