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Only 780,000 Romanians check their personal mandatory private pension account (Pillar II) online, i.e. 10% of the total number of 7.78 million registered participants, according to data from the Romanian Association for Privately Administered Pensions (APAPR) – even though all 7 administrators on the market offer this facility since the start of the system, on their own Internet portals.
The total number of registered participants in the Pillar II mandatory private pension scheme reached 7.78 million at the end of 2021, of which the average number of participants with monthly contributions paid in was 4 million, up by 140,000 compared to 2020. The amounts managed by the 7 mandatory private pension funds reached over 89 billion RON (18 billion EUR), up by 18.6% compared to the end of 2020.
The weighted average return of the 7 funds was 5.88% in 2021, slightly below the 6.19% in 2020. This return translates into a net gain for participants of 4.5 billion lei (€910 million) in 2021, slightly above the 4.4 billion lei (€900 million) gain generated in 2020. Since their launch (May 2008) and to date, Pillar II pension funds have recorded an average annual return of 8%, generating a total gain for participants (net of all fees) of 21.7 billion lei (€4.4 billion).
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The total volume of contributions paid into Pillar II in 2021 was RON 9.77 billion (EUR 2 billion), 9.6% higher than in 2020, mainly due to the increase in wages in the economy and the entry of new participants into the scheme. The administrators also made payments to participants and beneficiaries in 2021 for a total amount of about 278 million lei, 56% higher than in 2020. The total amount of payments made from Pillar II (from launch to date) is 675 million lei.
As for voluntary, optional private pension funds (Pillar III), the total number of participants reached about 565,000 at the end of 2021, increasing by 37,000 compared to 2020, the most significant increase in the last 5 years. Pillar III participants paid in total contributions of around RON 420 million in 2021, 13% more than in 2020 and an all-time high in annual terms.
The average monthly contribution for active participants reached RON 150 during 2021, i.e. exactly the tax deductibility ceiling (EUR 400/year for both employees and employers). These developments show, on the one hand, the interest and confidence of participants in the voluntary pension scheme and, on the other hand, the need to increase the tax deduction ceiling, which has remained unchanged for 12 years despite the 144% increase in the average net salary in the economy during this period. This makes the tax relief granted to Pillar III less than half as significant in relative terms as when it was introduced into the legislation.
The weighted average return of the 10 funds was 5.5% in 2021. From launch (May 2007) to the present, Pillar III pension funds have had an average annual return of 6.3%.
The amounts managed by Pillar III exceeded RON 3.4 billion (EUR 690 million) at the end of 2021, 16.5% more than in 2020. Payments made by voluntary private pension funds reached RON 100 million in 2021, 30% more than in 2020. The total amount of payments made from Pillar III (from launch to date) is RON 420 million.