Only two years after the pension system was reformed by theintroduction of private pension funds, the government is basicallycancelling this market in order to collect more money to thestate's social security budget.
The Government intends to cut the amount of the contribution paidby employees to mandatory private pension funds (2nd pillar) from2.5% 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, andthe initial contribution amounted to 2% of the salary. Privatefunds introduced the notion of money ownership, with each of the 5million clients having their own account, with the pension to bereceived based on the contributions paid. The system isfundamentally different from the state-controlled one, under whichmoney collected now from employees is paid to today's pensioners(pay as you go). The contribution that goes into the private systemis deducted from the money allocated for the state's pensionbudget, this being the reason for which this cut would lead to areduction in the deficit of the pension budget.
Private pension managers are strongly opposed to the contributioncut, saying amounts collected would fall by 2.4 billion RON (around600 million euros) by 2011, and that ultimately pensions of currentcontributors to the system could be 30% lower.
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