Romanians under 45 had to opt less than a year ago for private pension funds where to redirect part of their contributions towards pension. This was called Pillar II of the reform, and the funds operating under this pillar had stricter regulations to work by. Employees could also opt to redirect part of their pension contributions towards elective pension funds, assembled under a Pillar III of the reform, which had more lax regulations.
The financial crisis however shows that both type of private funds in Romania behaved in the same way: they all moved their investments towards safer financial instruments but, for this reason less profitable.
Pillar II has 14 private pension funds, with some 3,8 million people paying into them, makes 83% of its investment in Romania, and the rest in the EU; in September 2008 it had net assets of around 135.4 million Euro. Only four of the pension funds made profit after the first two months in operation – May and June. The current investment pattern in Pillar II is: 16.52% in bank deposits; 3.42% in company shares; 63.05% in state bonds and 16.92% in company bonds.
This is a dramatic change from the June 2008 investment pattern, when 43.1% of the money were into bank deposits, 6.1% - in company shares, 43.8% - in state bonds and 6.7% - in company bonds.
Pillar III has nine pension funds, 125,444 people paying into them, and net assets of around 16 million Euro. In spite of the more lax legislation regulating them, which would allow for bolder investment moves, Pillar III funds behaved almost similar with Pillar II funds. At the start of the year, they had 37.57% of investments in state bonds, and 54.26% of them in bank deposits. In September, however, this had changed to 66.81% of the money put in state bonds, 13.74% - in bank deposits, 12.42% - in corporate bonds, and 5.87% -
