The mandatory privately administered pension scheme is regulated by Law No 411/2004 on privately administered pension funds, as amended and supplemented.
This system was introduced in Romania in 2008. Until then the contribution to the social insurance budget was used to pay current pensioners. Currently, under the privately administered pension system, 3.75% of gross monthly salary goes into a privately administered individual pension account. The money is invested by the pension fund manager in financial instruments such as deposits, government securities, corporate bonds, municipal bonds, shares listed on regulated markets, etc.
Pillar II is compulsory for people up to the age of 35 who are insured in the public pension system. If within four months of employment the person does not choose a pension fund, the National Pension House will automatically allocate a privately managed fund.
People aged between 35 and 45 can join such a pension on a voluntary basis.
People who do not know to which pension fund they have been allocated can check this information on the APAPR (Association for Privately Administered Pensions in Romania) website – www. apapr.ro
If you want to transfer from one private pension fund to another the procedure is simple and consists of:
- Signing the act of accession to the new fund – the documentation must be
requested directly from the fund administrator;
- Notification of the current administrator. The form can be obtained from the ASF
(Financial Supervisory Authority) website;
- Receipt of the transfer information by post.
The amounts due from Pillar II can be collected by the beneficiary in two ways:
– in full, on account or by postal order;
– in instalments, for a maximum period of 5 years.
The accumulated sums may be cashed in by the beneficiary in the following situations:
– In the event of retirement due to age limit;
– in the event of disability under the Public Pensions Act;
– in case of death of the participant, by the legal heirs.