ROMANIA - Workers have missed out on an opportunity to capitalise on recent double digit returns because contribution levels are too low, the country's pension funds association (APAPR) says.
Mandatory (second pillar) pension funds returned an average of 11.31% in the first eight months of 2009, and voluntary (third pillar) schemes posted an average of 10.73% during the same period, according to latest industry figures.
But APAPR chairman Crinu Andanut decried a missed opportunity for a country which has the lowest levels of mandatory member contributions directed to second pillar funds of all Central and Eastern European countries.
"It's a shame that the industry managed to perform admirably in terms of returns, and we put those returns on top of so small contributions directed to the system," Andanut said.
The Romanian government has already come up against opposition and condemnation from the pensions industry earlier this year when it sought to freeze second pillar member contributions at their current 2% level, rather than increasing them to 2.5% as stipulated by law.
The 12 second pillar pension schemes in Romania posted a net weighted average return of 11.31% for the first eight months of 2009 and a 15.53% return for the 12-month period ending in August 2009.
The 13 third pillar schemes posted net weighted average returns of 10.73% and 10.65%, respectively, over the same time periods.
The schemes are invested very conservatively, with the majority of assets in state securities, municipal and corporate bonds, and money market instruments.
Second pillar schemes have a low equity exposure, allocating 5-6% to the asset class, while third pillar invest closer to 10%, possibly explaining their slightly lower returns.
"Returns posted by all the Romanian private pension funds proved to be remarkable and the conservative approach paid off. All in all, we can now say our industry kicked off with outstanding results," Andanut said.
"We managed to escape the crisis unharmed by the global fall in equity markets, but we entered those markets just in time to benefit from the rally in the last few months. Our only drawback is the very low level of contributions."
Standard Life has increased exposure to risk assets in three out of five funds in its Active Plus and Passive Plus workplace pension ranges.
Some 48% of employers are unaware of the services or help they offer to members of their defined contribution (DC) schemes, according to Aon.
Welplan Pensions has triggered its exit from the master trust market, with just a few days to go until The Pensions Regulator's (TPR) application deadline.