Pension Pillar II rate of return at 9-year high in 2019

The average rate of return of Romania's 7 mandatory privately-managed pension funds (Pillar II) was 11.8 percent in 2019, a 9-year best attained mainly due to the recovery of the depreciation triggered by OUG No. 114/2018 in the economy and on the financial markets, as well as to above-expectation performances on the Bucharest Stock Exchange, Romania's Privately-managed Pensions Association (APAPR) said in a release. 

According to APAPR, the overall return of the Pillar II pension funds from the start (May 20, 2008) to the end of 2019 was 154 percent, ie an average annualized return of 8.35 percent. This indicator is well above the total inflation rate over the reporting period (41.8 percent), and of the average annualized inflation rate for the same period (3.05 percent). 

APAPR said that the net gain from investments of Pillar II pension funds stood at more than 2.6 billion euros (12.6 billion lei) out of the 13 billion euro worth of assets held by Pillar II pension funds at the end of 2019, a figure net of fees, which, following the legislative changes made last year, are among the most competitive in Europe. 

"The performance of both Romanian and foreign pension funds will always carry a certain volatility, as it closely reflects the evolution of the financial markets and of the economy as a whole, for a regulated asset structure. These developments are also strongly influenced not only by the economic milieu, but by political decisions too. Such a moment was the adoption at the end of December 2018 of OUG No. 114/2018, which prompted the plunge of the Romanian financial markets, including the Bucharest Stock Exchange, where the pension funds have significant investments," APAPR said.