Since 2008, about 200,000 Romanians have been continuously contributing to pension pillar II. These veterans have collected over 180 monthly dues and a significant percentage of interest.
About 200,000 Romanians have paid contributions since the first day of the launch of the II Pension Fund in Romania, and after 15 years they had an average of 48,000 lei in their account.
Of the 48,000 lei, approximately 36,000 lei is a salary transfer, and the rest is interest. For comparison, 8 million Romanians currently have an average account of about 13,600 lei, the Observer notes.
From 2024, the contribution to private pensions will increase by one percentage point from 3.75% to 4.75%, according to the decision of the government, correlated with the provisions of the NDP.
Currently, a monthly interest of 3.75% of the 25% CAS share is transferred to the accounts of more than 7 million Romanians in Pillar II. The rest, 21.25%, goes to the state pension – the 1st pillar. Starting next year, the percentage will increase to 4.75, but the share may decrease – from 25% to 20%, which means that more money will be saved directly for retirement.
Participation in Component II is mandatory when a person under the age of 35 starts working. Membership is optional for persons aged 35 to 45. Romanians’ money is collected in one of seven second-tier funds managed by private companies.
Tax-free contributions to non-state pensions from January 1, 2024
Contributions to private pensions will be exempt from tax in the future. MPs voted in favor of a proposal that the state can no longer tax the amounts people collect from contributions to private pension funds. Thus, only the income that the administrators of these funds received after managing the money will be taxed. This measure applies to the second and third pension pillars.
The measure, which is part of an amendment to the Tax Code, came after some of those reaching retirement age found that the amounts they were withdrawing were 10% lower after taxes imposed by the state.