A bill on the payment of private pensions was presented on Friday in the first reading at a government meeting, and it provides for two forms of payment: a programmed withdrawal pension, which will be paid for a determined period, with the guarantee of full reimbursement of the accumulated assets, and the life pension, with payment for the entire life of the participant, Chairman of the Financial Oversight Authority (ASF) Alexandru Petrescu told a briefing at the end of the government meeting.

'Passing the law on the payment of private pensions is a necessary and priority step, aiming to complete the legal framework applicable to private pensions by creating the basis for the functioning of the pension payment phase and the conditions for its operationalisation,' said Petrescu.

He added that the law on the payment of private pensions is an essential strategic and priority measure for completing the architecture of the private pension system in Romania and aligning it with the international standards promoted by the Organisation for Economic Cooperation and Development (OECD), given that, within the process of our country's accession to this organization, the OECD's only priority request in the field of private pensions was the passage of a primary legislative framework regulating the payment phase.

'In September this year, during the evaluation session of the OECD's Committee on Financial Markets, Romania will have to present how to implement this priority recommendation,' Petrescu said.

According to him, the private pension system currently has over 9 million contributors and assets totalling the equivalent of over 10% of Romania's GDP, and the passage of the legal framework for the payment of these pensions is necessary 'to provide contributors with predictability and the real guarantee that their savings will turn into secure and long-term income.'

The ASF chairman explained that the bill proposes the introduction of private pension payment funds set up specifically for this purpose, which will be administered by authorised entities, called private pension providers. The entities that will be able to become pension providers can be: current managers of private pension plans, life insurance companies, investment management companies or new companies specially established for this purpose based on the law.

The mechanism is built in two main directions, namely on two forms of private pension value extraction: the programmed withdrawal pension, which will be paid for a determined period, with the guarantee of full reimbursement of the accumulated assets, and the life pension, with payment for the entire life of the contributors. In addition to these two forms of payment, pensioners are also entitled to withdraw a lump sum of up to 25% of the accrued assets, in a form similar to those applied in other European states.

'Under this law, the rules of authorisation, operation and supervision for the payment funds are established, and here the ASF has the main role, the separation of the assets of the payment fund from those of the supplier is guaranteed, the guarantee of the full reimbursement of the accrued asset in the case of scheduled withdrawal payment funds is ensured,' he said. AGERPRES (RO - writing by: Nicoleta Gherasi; EN - writing by: Corneliu-Aurelian Colceriu)