Romanian Prime Minister Suggests Making Private Pension Plan Optional

Romania could be heading toward making its  mandatory private pension plan optional from 2018, according to Prime Minister Mihai Tudose.

Just last month, Tudose said that the government was considering reducing contributions to mandatory private pension plans as well as redirecting some funds into state pensions. Romania’s government may be  looking in other directions for the funds by potentially putting citizens in charge of their own retirements.

“I think the solution we are heading toward is to tell the population, based on their salary levels, where it is best to keep their money,” Tudose told local television station Digi24. “No one is dismantling the second pillar, tormenting or torturing it, but it will be optional.”

In 2008, Romania reformed its communist-era pension system, allowing Romanians under age 35 to contribute a “second pillar” of private pension plans in addition to their state pension. According to Reuters, just under 7 million people were contributing to second-pillar private pension schemes, which were 36.06 billion lei at the end of June, equal to more than 4% of gross domestic product.