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The total return on investment reported by pillar two pension fund managers was 127.1pct May 20, 2008 to the end of 2018, giving an average annual yield rate of 8.03pct, according to a press statement released by the Association of Romania's Privately-managed Pension Plans (APAPR).
"The total return of all pillar two funds from their inception on May 20, 2008 throughout 2018 was 127.1pct, which is an average annual return rate of 8.03pct for the entire pillar two. This indicator is well above the total inflation rate in the same period (36.3pct), and even the average annual inflation rate for exactly the same period (2.95pct)," according to the statement.
APAPR's reports come after media representations over the past few days about the performance of the pillar two private pension plans.
According to APAPR, out of 10.2 billion euros managed on pillar two at the end of 2018, more than 1.5 billion euros are net investment gains, only for the over 7 million Romanians contributing to this system. The amount is net of all administration fees.
"The performance of pension funds in Romania and the world will always have a certain volatility, as they closely follow developments in financial markets and the economy as a whole. Moreover, these developments are strongly influenced not only by the economic environment, but also by political decisions. Such a moment was the adoption at the end of December 2018 of Government Emergency Ordinance 114/2018, which caused sudden and severe financial market disruptions in Romania, including of the Bucharest Stock Exchange, where the pension funds have significant investments."
According to the organisation, this was one of the main reasons why 2018 was the only year since the establishment of pillar two when the one year yield was below inflation.
"APAPR is trying at this time to find channels of communication and organisational dialogue with all the relevant officials to discuss the negative effects of OUG 114/2018 on pillar two. We hope that dialogue with the relevant decision makers will lead to the amendment of OUG 114/2018 to reconsider the additional capital requirements on sustainable economic bases, and therefore the development of the pillar two of privately-managed pension plans in Romania, as well as the restoration of confidence in the financial markets."
