Theoretical and Applied Economics (Dec 2019)
An analyses model of the Romanian privately managed pension system
Abstract
The Romanian privately managed pension system (Pillar II) is a system financed though the allocation towards the privately managed pension funds of a certain percentage from the contributions due by the participants to the public social insurance system. The main advantage of the system is represented by the fact that the amounts received by the pension funds will be better used, being invested by the pension management companies, which will ensure that he amounts saved by the participants will increase on the long run. Pillar II is compulsory for employees under 35 years old and optional for those between 35 and 45 years old, at the moment of enrolment. By contributing month after month until retirement, assets will be accumulated and will be multiplied through investments, ensuring a supplementary pension beside the public system one. The pension management companies are only authorized companies, in that way the investments will be made in a professional environment, towards profitable areas, ensuring the accumulated assets profitability. The number of participants at Pillar II is increasing since the inception of the system and this trend will continue at least on medium term. From the start of the system to the moment of the first pension payments, there were and there will only be a small number of participants, which received or will receive the assets accumulated in their accounts. Until the first participants enrolled will reach the legal retirement age, the amounts in their accounts will continue to grow, while efficiently invested, will offer a guarantee for a higher supplementary pension.
