Calculated at the end of 2025 for the past five years, the placements made by a contributor to Pillar II pension funds in Romania, earning the average wage each month, generated a real internal rate of return (IRR) adjusted for the consumer price index of between 2.8% (BRD fund, currently under the management of Banca Transilvania financial group) and 4.1% (Aripi fund, defined as higher-risk fund and managed by Generali), according to calculations based on data published by the financial supervisory authority.
The largest fund by assets (NN, managed by ING’s insurance division NN Asigurari) generated 3.8% real IRR over the past five years.
Notably, this stands for the returns generated by the contributions made during the five-year period, which is different from the return generated by the money in the portfolio at the beginning of the five-year period (which was generally negative in real terms, for the past five-year period). The overall return incurred by individual contributors depends on their period of contribution: those with longer periods of contribution (hence larger portfolios at the beginning of the period) may have incurred losses, while newer contributors incurred significant gains.
Regarding the current contributions’ return, the funds performed greatly over the past couple of years (particularly in 2025) on stable and high state bon yields combined with robust gains on the Bucharest Stock Exchange (BVB), after negative performances in the first two years of the period when the high inflation dragged the government bonds down with a visible impact on the pension funds’ portfolios. Further narrowing of borrowing cost, combined with positive dynamics at BVB, could keep the Pillar II pension funds safely in the positive area for the coming year.
The nominal IRR ranged between 11.4% (BRD) and 12.7% (Aripi), with 12.3% for NN.
The spread of the yields is rather narrow, which means that the gain achieved by switching among funds is rather small – yet it may be interesting over long periods of time. The difference between the weakest-performing and the strongest-performing funds for an ideal contributor earning the average wage over the five years was only 2.6%. Calculated over the entire Pillar II lifetime, since 2008, the differential is 4%: RON 61,440 versus RON 59,057.
Separately, the yield generated by the money in the portfolio of contributors at the end of 2020 (at the beginning of the five years) was 48%-54% (cumulated) compared to 54% consumer price inflation – meaning that the portfolio at the beginning of the period generated small negative returns. The real losses incurred by Pillar II contributors over the five-year period ranged between +0.0% per annum (Metropolitan, small increase) and 1.2% per annum (BRD), with NN at 0.2%. Thus, the contributors of Metropolitan managed to achieve a 0.2% increase in their portfolio at the beginning of the period, while contributors to BRD lost 5.6% of their portfolio.
Real IRR stands for the real yield of the placements made by the pension fund contributors and was calculated for an ideal contributor earning the average wage each month. In practice, the contributors to the Pillar II pension funds make average monthly contributions consistent with wages, some 10%-20% below average. Separately, the average contributions to the seven pension funds are significantly different, with the highest average contribution (hence the highest average wage) made by contributors to NN.
The average annual inflation rate over the five years was 9.1% per annum.
iulian@romania-insider.com
(Photo source: Chernetskaya/Dreamstime.com)
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