Q: What is your perspective on the private pension system in 2016, regarding Pillar 3?
Melania Mirea: Due to the countries’ around the world need of change and economic growth, the beginning efforts of the pension reforms are intensively promoted, having by now a positive impact which should continue in the future. In Romania, I have noticed that the number of people aware of individual saving is increasing, alongside with people’s need of financial education.
The net assets for Fondul de Pensii Facultative BCR Plus (BCR Plus) were RON 226. 83 million in May 2016 (compared with 190.10 in May 2015), submitting a growing rate of 19%, according to BCR Pensii SAFPP S.A. calculations based on data published by the Financial Supervisory Authority. In the above mentioned period, the voluntary pension market has increased in terms of net assets, on average, with 16%.
In 2016, at the end of May, BCR PLUS had 119,276 participants, more than 14% increase when compared to the same period in 2015. In the same period, the voluntary pension market has increased in terms of new participants, on average, with 9.79%.
Q: How can the economic growth of the recent years be related to saving in the private pension system?
Melania Mirea:Growing private pension savings are intensively correlated to the economic growth; specifically, companies have higher income which they can partially return to employees in the form of benefits, such us 3rd Pillar pension and, at the same time, take advantage of tax savings.
3rd Pillar pensions offer tax advantages to employers because, under the limit of EUR 400 / employee/ year, the contribution paid by the employer is deductible at company income tax computation, while not being considered as payment assimilated to the salary (and therefore being outside the area of social contributions).
In terms of GDP growth in the year 2015, Romania ranks 6th in the European Union and is predicted to have an economic growth in 2016 of 4.2 compared with 3.7 in 2015. For example, last year, private pension funds were 3.70% from GDP, compared with 3.03% in December 2014 and 3.26% in June 2015. An increased amount of assets is associated with more efficient financial markets and, therefore, higher economic growth. The private pension system has a positive impact and puts focus on the protection of pension members and the beneficiaries’ interests. The encouragement of pension provision, in general, sustains the pension sector as a whole.
Q: When governments realize they need money, sometimes they take ad-hoc measures. In Romania, we experienced in the past the freeze of the transfers of social contributions to the private pensions system. In Poland and most of all Hungary, we have seen even more disruptive measures. Taking this into consideration, please provide arguments for the importance of maintaining the private pension system.
Melania Mirea:The mandatory private pension (Pillar 2) is for many Romanians the only savings solution for the retirement age. Under the pessimistic framework of the economy, it would be dramatic if Pillar 2 no longer existed and now we must act responsibly for the future generations, starting from the information in mass media and the engagement of the civil society. BCR Pensii is actively involved online in spreading the right answers and also internally through a new mobile application, offering information and trainings to our sales agents aiming to increase the quality of information we give to our clients. It is required, as fast as possible, to approve the law on the organization and functioning of the payment system of private pensions, to achieve the target of 6% from social insurances contributions to Pillar 2 and to encourage the employers to adopt private pensions through the granting of tax advantages.