Dan Armeanu (ASF): Positive evolution of private pension system in first quarter of 2019

The private pension system had a positive evolution in the first quarter of 2019 and the statistical data related to the first quarter of 2019 are eloquent in this respect: 7.79 million participants and 53.21 billion lei assets under management, up 7.28pct from December 2018, accounting for 5.5pct of GDP, said Dan Armeanu, vice-president of the Financial Supervision Authority (ASF) - Private Pensions System sector. 

"A decade since its establishment, the private pension system proves the solidity and security of a mature market characterized by a consistent asset value and a critical mass of participants that ensures its long-term stability and sustainability," Dan Armeanu states in a press release of the ASF sent to AGERPRES on Monday. 

In the first quarter of 2019, 59,800 people were randomly assigned or joined a privately managed pension fund, the percentage of randomly assigned people dropping by about 45pct compared to December 2018, indicating an increase in interest in the private pension system. At the same time, 9,445 new participations joined in the optional pension schemes, which shows confidence in the system and an increased concern with the accumulation of long-term resources to supplement the retirement income, the cited source specifies. 

Between January and June 2019, a total of 215 participants requested the suspension of their contribution and their transfer to pension Pillar I. 

"This number is insignificant and reflects the confidence that the private pension system enjoys, given the expression of an implicit option in its favor. Thus, it is confirmed that the vast majority of employees have acknowledged the need to diversify the source of their retirement income, with an accumulation component, as an alternative to the public pension system, by combining the redistributive system with the accumulation system in order to reduce potential uncertainties related to pension level," Armeanu said. 

In March 2019, the average value of an account with privately managed pension funds was 7,101 lei, up 6.45 pct as compared to December 2019, while the same indicator was 4,788 lei for optional pension funds. The amount of the account is determined by the amount of the contribution and the contribution period. Higher average values of the pension Pillar II accounts were recorded among participants in the 35-39 age group, namely 19,677 for men and 18,571 for women. 

At the end of the first quarter of 2019, aggregate investment structure was maintained on a conservative line with prudent diversification, by investing in government securities amounting to 61.30pct in Pillar II pension funds and 58.34pct in Pillar III pension funds and share investments of 18.32pct and 21.13pct, respectively. A further 20pct were covered by the category of other assets: bank deposits, corporate bonds, bonds issued by non-governmental foreign bodies, participation titles, etc. 

"The fact that 92pct of Pillar II pension funds assets and 88.8pct of optional pension funds assets were denominated in RON highlights the contribution and importance of optional pension funds to the financing of the local economy, a circumstance of which the contributors to the pension funds indirectly benefit. In keeping with a balanced mix of investments to ensure security, liquidity and moderate to low risk, despite the high volatility recorded by the shares traded on the Bucharest Stock Exchange in the first quarter of the year 2019, the rate of return of the high-risk Pillar II pension fund was 2.4785pct, while the weighted average rate of return for medium-risk funds was 2.8758pct in March 2019. During the same reference period, the weighted average rate of return of the high-risk Pillar III funds was 2.1434pct, and for the medium-risk one was 1.599pct," said the ASF vice president. 

According to him, every citizen should also take into account the participation in an optional pension fund for a longer period of time, included, in order to maintain a living standard with the one he had during the active period. 

"Another issue that concerns us involves the implementation of digital technology both in relation to potential participants in order to fully inform them at all times and to simplify and improve the internal processes and the activity of the administrators, in order to make the functioning of the private pension system more efficient," says Dan Armeanu.