Shock on private pensions market: Government cuts contribution from 2.5% to 0.5% of salary

Only two years after the pension system was reformed by the introduction of private pension funds, the government is basically cancelling this market in order to collect more money to the state's social security budget.
The Government intends to cut the amount of the contribution paid by employees to mandatory private pension funds (2nd pillar) from 2.5% of the monthly gross salary to 0.5% over the next two years, in order to lessen the public pension budget deficit.
The private pensions system was introduced just two years ago, and the initial contribution amounted to 2% of the salary. Private funds introduced the notion of money ownership, with each of the 5 million clients having their own account, with the pension to be received based on the contributions paid. The system is fundamentally different from the state-controlled one, under which money collected now from employees is paid to today's pensioners (pay as you go). The contribution that goes into the private system is deducted from the money allocated for the state's pension budget, this being the reason for which this cut would lead to a reduction in the deficit of the pension budget.
Private pension managers are strongly opposed to the contribution cut, saying amounts collected would fall by 2.4 billion RON (around 600 million euros) by 2011, and that ultimately pensions of current contributors to the system could be 30% lower.