Private Pension Scheme
Sistemul de pensii administrate privat
Coverage
Mandatory participation
- Persons insured in the statutory old age pension scheme (exception: persons above the age of 35 in 2006 or at the time of acquiring insuree status).
- Persons can choose the pension fund; persons who have not joined a pension fund within 4 months of the specified date are randomly allocated; persons can switch between different private pension funds by notifying the manager of their current pension fund.
Opting in
- Persons insured in the statutory old age pension scheme who are between the age of 35 and 45 in 2006 or at the time of acquiring insuree status; persons have the option of opting into the scheme by signing an individual act of accession and can either choose a pension fund or are allocated randomly.
- Once a person chooses to opt in, they have no right to opt out of the scheme until qualifying for the old age pension; participation can only be ‘paused’ for periods when no social security contributions are due.
Financing
General finances
- Fully funded based on contribution payments (incl. interest and late contribution payment penalties) and capital revenues.
Contribution payments
- Fixed share of monthly gross earnings (3.75%) as part of the statutory pension contributions (in relation to the contributions for the statutory old age pension scheme).
- Contributions are entirely covered by employee; the amount of the contribution is determined on the basis for calculating the individual social security contribution mentioned in the declaration of insurance to the public pension system.
State support
- Contribution payments are deductible from the basis for the calculation of the statutory social security contributions (in relation to the contributions owed for the statutory old age pension scheme, the military pension scheme, and the judges’ and prosecutors’ service pension scheme).
Administration
- Pension plan providers (i.e. joint stock companies that have as only activity the administration of pension funds) manage pension funds and pay benefits directly to the eligible person.
- The ‘Supervisory Commission of the Private Pension System’ licenses, oversees and sanctions the pension plan providers.
- The ‘Private Pension Guarantee Fund’ compensates losses of persons and beneficiaries, both during the period of capital accumulation and after the pension entitlement, caused by the inability of managers or pension providers to meet their obligations; fund managers and private pension providers pay contributions1 to the Private Pension Guarantee Fund.
Qualifying Conditions
- Based on entitlement to old age pensions from the statutory old age pension scheme.
Benefits
Pension payments
- Accumulated capital through contribution payments and investment yields, minus administrative costs and costs/fees of pension provider.
- Guarantee of no losses in nominal amounts.
Taxation and social security contributions on pension payments
- Taxable pension income is subject to 10% income tax (the taxable pension income is determined by deducting the monthly non-taxable amount of RON 2,000 from the pension income).
- Pension benefits are not subject to social security contributions.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Mandatory participation
- Persons insured in the statutory old age pension scheme (exception: persons above the age of 35 in 2006 or at the time of acquiring insuree status).
- Persons can choose the pension fund; persons who have not joined a pension fund within 4 months of the specified date are randomly allocated; persons can switch between different private pension funds by notifying the manager of their current pension fund.
Opting in
- Persons insured in the statutory old age pension scheme who are between the age of 35 and 45 in 2006 or at the time of acquiring insuree status; persons have the option of opting into the scheme by signing an individual act of accession and can either choose a pension fund or are allocated randomly.
- Once a person chooses to opt in, they have no right to opt out of the scheme until qualifying for the old age pension; participation can only be ‘paused’ for periods when no social security contributions are due.
General finances
- Fully funded based on contribution payments (incl. interest and late contribution payment penalties) and capital revenues.
Contribution payments
- Fixed share of monthly gross earnings (3.75%) as part of the statutory pension contributions (in relation to the contributions for the statutory old age pension scheme).
- Contributions are entirely covered by employee; the amount of the contribution is determined on the basis for calculating the individual social security contribution mentioned in the declaration of insurance to the public pension system.
State support
- Contribution payments are deductible from the basis for the calculation of the statutory social security contributions (in relation to the contributions owed for the statutory old age pension scheme, the military pension scheme, and the judges’ and prosecutors’ service pension scheme).
- Pension plan providers (i.e. joint stock companies that have as only activity the administration of pension funds) manage pension funds and pay benefits directly to the eligible person.
- The ‘Supervisory Commission of the Private Pension System’ licenses, oversees and sanctions the pension plan providers.
- The ‘Private Pension Guarantee Fund’ compensates losses of persons and beneficiaries, both during the period of capital accumulation and after the pension entitlement, caused by the inability of managers or pension providers to meet their obligations; fund managers and private pension providers pay contributions1 to the Private Pension Guarantee Fund.
- Based on entitlement to old age pensions from the statutory old age pension scheme.
Pension payments
- Accumulated capital through contribution payments and investment yields, minus administrative costs and costs/fees of pension provider.
- Guarantee of no losses in nominal amounts.
Taxation and social security contributions on pension payments
- Taxable pension income is subject to 10% income tax (the taxable pension income is determined by deducting the monthly non-taxable amount of RON 2,000 from the pension income).
- Pension benefits are not subject to social security contributions.
1 The contribution is based on the pension fund’s own assets and does not interfere with the persons' accumulated capital.
Legal Basis: Law No. 411/2004 regarding private pension funds (Legea nr. 411/2004 privind fondurile de pensii administrate privat); Law No. 187/2011 on the establishment, organisation and operation of the Private Pension Guarantee Fund (Legea nr. 187/2011 privind înființarea, organizarea și funcționarea Fondului de garantare a drepturilor din sistemul de pensii private); Law No. 227/2015 regarding the Fiscal Code (Legea nr. 227/2015 privind Codul fiscal).