The Romanian government has approved long-awaited payout rules for private pensions to support its plans to join the Organisation for Economic Cooperation and Development (OECD), but consumer groups argued the law restricts participants’ control over their savings and unfairly favours state and industry interests.

The government adopted the proposal yesterday, 21 August, after two weeks of debate, sending it to parliament under urgent procedure.

The draft included two notable changes: The maximum lump-sum withdrawal at retirement has been raised from 25 to 30 per cent of assets, while the minimum duration of programmed withdrawals has been reduced from 10 to eight years.

The reforms aim to resolve a long-standing legislative gap - payout rules have been missing since 2011 - and speaking in a government meeting, Romania’s Financial Supervisory Authority (ASF) said the law was aligned with European standards and OECD principles.

ASF vice-president, Dan Armeanu, described it as a “strategic objective” that both addressed OECD recommendations and defined the “entire architecture” of Romania’s pension system.

Armeanu explained that payments would be subject to standard social contributions and capital gains tax, typically amounting to around 12-13 per cent of assets, depending on how savers choose to draw their pension.

Pressed by reporters on why the proposal to allow full withdrawals in cases of serious illness had been excluded, Armeanu claimed that such provisions were “quite difficult to put into practice”, given the wide variation in individual health circumstances.

Consumer groups, however, remain unconvinced.

The Romanian Association of Financial Services Users (AURSF) and pensions expert, George Moț, argued that the draft “seriously violates” citizens' rights to control their savings and instead consolidated an “oligopoly market” dominated by the state and financial industry.

They criticised the exclusion of the illness clause and warned that obliging retirees to accept fixed payout rules, rather than letting them decide the pace of withdrawals, undermined personal freedom.

“It is absolutely necessary that the law provides for the citizen’s right to establish the level of their monthly pension and the payment period, of course, within well-established limits," Mot stated, warning that "at the moment, this right does not exist."

AURSF president, Alin Iacob, added: “Romanians have the lowest healthy life expectancy at retirement age in the European Union. Under these conditions, it is not acceptable to impose a minimum period of eight years for the payment of private pensions, nor a maximum ceiling on lump-sum withdrawals.”

Consequently, both AURSF and Moț have submitted proposals to the Ministry of Labour, the ASF, the Prime Minister’s Office and Romania’s governing parties, urging further consultation and the creation of a working group to develop “fair” legislation.

They also criticised authorities for ignoring repeated calls from civil society for a broader public debate.

The AURSF, supported by Better Finance, has previously accused the authority of excluding consumer representatives from a key debate on the pension law in favour of finance industry participants.

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