The seven mandatory private pension funds in Romania’s pillar II recorded a weighted average return of 17.9 per cent in 2023, their best annual performance since the system was introduced, the Association for Privately Administered Pensions in Romania (APAPR) has revealed.

This was more than 10 percentage points above the inflation rate estimated for last year, according to APAPR’s calculations.

During the year, the net assets managed in Romania’s pillar II pension system increased by 31.4 per cent to a record RON 126.7bn (€25.5bn).

There are 8.1 million Romanians enrolled in pillar II private pensions, with 4 million contributing regularly.

APAPR said that the positive results were driven by the recovery of government bond prices and the positive returns on equity investments during the year.

Since its inception in 2008, pillar II pensions recorded an average annual return of 7.82 per cent against an average annual inflation of 4.35 per cent.

In monetary terms, mandatory private pension funds generated a total gain, net of all fees charged, of RON 36.9bn (€7.4bn), in addition to the contributions received in administration, exclusively for the benefit of contributors.

Between 2008 and 2023, pillar II pension funds paid out more than RON 2bn, with almost half of this amount (RON 932m) being paid out in 2023.

APAPR stated that 2024 also began with “good news” for participants, with the contribution rate rising from 3.75 per cent to 4.75 per cent.

Commenting on the update, APAPR president, Radu Crăciun, said: "The yield of 2023 confirms once more the medium- and long-term winning formula that private pension funds offer.

“Even if negative developments can occur in the short term, as was the case in 2022, the subsequent recovery of the markets means that the long-term positive trend is maintained.

“It is an invitation to calmness and trust in the moments when the markets do not offer, temporarily, the expected returns."

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