The Pension Landscape Romania
The Pension Landscape in Romania has undergone significant changes in the last decade. Nowadays it is composed of the statutory provision as part of the social insurance, a mandatory private tier, called second pillar and voluntary private pension provision also in the form of occupational pension (called third pillar according to the World Bank’s Multi Pillar model).
Contributions to the private tier of the mandatory system are transferred by the state pension institution, CNPP, to a private fund which is authorized and supervised by the ASF (Autoritatea de Supraveghere Financiară). With the setup of a regulatory framework in 2006 the to a voluntary occupational/private provision was paved as well and the possibility was opened for employers and/or social partners to create company/branch pension plans managed by pension- or insurance companies and asset managers.
| Provider / Institution: | Casa Națională de Pensii Publice CNPP and privately-managed Pension Funds |
| Provision: | The mandatory pension provision statutory as part of the social insurance for employees and self-employed persons consists of two components: The Insurance managed by CNPP and a privately-managed (compulsory) Pension Funds as a so called second pillar. Since a reform of 2010 military, police, diplomats and navigation personnel are integrated into the general scheme. A voluntary participation is possible for Lawyers and members of religious communities. |
| Retirement Age: | 65 for men and women, possible to get the private pension. |
| Social Security Fund managed by CNPP | Pension Funds | |
|---|---|---|
| Financing: | Financed on a pay-as-you-go basis through the mechanism of notionally defined-contribution accounts. | Fully funded Participation only at one fund at the same time. |
| Contributions: | Total contribution 25 % (2026) of taxable income to the old-age pension insurance. | 4,75 % payed by employees only, with the exception of some hazardous professions. |
| Pensions/ Benefits: | Covers old-age, disability and death. | Covers old-age, disability and death. |
| Calculation: | The pensions are calculated according to an algorithm based on pension points (calculated by comparing the own salary to the average monthly salary). | Defined contribution system (DC) type; authorized and supervised by the Private Pension System Supervisory Commission CSSPP. |
| Occupational plans: | Voluntary private pension provision also in the form of occupational pension (called third pillar according to the World Bank’s Multi Pillar model) Employers and trade unions can establish occupational pension schemes, company or industry wide, with voluntary participation for employees. |
| Products: | Optional pension scheme (savings) managed by private companies. |
| Financing: | Defined contributions (DC) type. Evidence of participants' contributions kept in individual accounts. Based on capitalization, respectively on contribution investment and accumulation. |
| Contributions: | The contributions are paid by the employee, maximum 15% of the incomes. The employer can contribute a share. One has the possibility to participate, at the same time, in several voluntary pension funds (without exceeding 15% of the gross salary). |
| Tax incentives | Contribution deductibility of up to 400 EUR for a fiscal year, for the employee as well as for the employer. |
| Portability: | The transfer between funds (First Pillar Pension Funds and Private Pension Savings) is allowed (transfer penalty in case it is made sooner than 2 years since entrance). |
| Retirement age: | 65, occupational funds can be accessed from the age of 60, provided they have made a minimum of 90 monthly contributions and accumulated sufficient funds. |