The private pensions law, which sets out how money can be withdrawn from private pension systems like Pillar II and III, passed the final vote in Parliament and is heading for promulgation. According to the new regulation, participants could withdraw at most 30% of the accumulated savings upon retirement. The rest of the money is to be paid in installments over eight years.
Pillars II and III, introduced in 2008, are meant to supplement the state-ensured Pillar I pensions. Currently, the average personal account is worth EUR 4,000 for the former and EUR 1,300 for the latter.
Until now, Romanians could withdraw the entire amount accumulated in their private pension fund.
After the new law, cancer patients will be the only ones who will have the right to withdraw their entire accumulated amount in a single installment.
“In this way, to improve their quality of life, they can secure the best treatments and have an extra chance to win the fight against the disease,” said Nicoleta Pauliuc from the Senate floor, one of the initiators of the amendment, cited by Digi24.
During the debates, several proposals were made to extend the exception allowing full withdrawal to other categories of beneficiaries, such as people with serious illnesses or those included in health programs, not just oncology patients. Deputy Claudiu Năsui, part of the center-right Save Romania Union (USR) governmental party, proposed that all contributors should be able to withdraw all their money at once, while Liberal Florin Roman, also part of the governing coalition, requested that the period over which the money is received be reduced from eight to six years. All proposals were rejected.
In the end, the bill passed the Chamber of Deputies, which had the final say, with 178 votes in favor, 64 votes against, and 22 abstentions.
Members of Parliament from the far-right party Alliance for the Union of Romanians, or AUR, oppose the bill. After its passing, the party announced that it would file a referral with the Constitutional Court, arguing that the new form benefits fund administrators, since they will collect commissions between 0.21% and 0.27%, as well as the state, which secures funding.
The High Court of Cassation and Justice is also analyzing whether to refer the law to the Constitutional Court, according to Free Europe Romania.
The ruling coalition debated the private pensions law throughout the last summer. The final version of the adopted law covers both Pillar II of the pensions system, where around 8.4 million people contribute, and Pillar III, which has over 939,000 participants.
The initiators of the law now heading to promulgation say that it will add predictability in the long term. Some, however, disagree on its fairness. In general, Romanians fear that they will not be able to maintain a comfortable standard of living after retirement, according to the Retail Banking Radar report, produced by the consulting company Kearney. Half express that fear, while a third simply don’t know what to expect.
(Photo source: Cristi Croitoru | Dreamstime.com)
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