​Almost 5,900 Romanians retired due to the age limit in the first six months of this year and collected money from Level II, but amid a decrease in the value of assets this year, but some found that they had more bills than they contributed. Since by law you can’t get less than you contributed, the administrators made up the difference, but after paying CASS and income tax, dozens of Romanians took out less than they listed.

The Financial Supervisory Authority (ASF) announced last month what payments were made in the second tier of pensions (mandatory private pensions) in the first six months of this year by age, disability and death.

Almost 5,900 Romanians reached retirement age: how much money they invested in Tier II and how much they withdrew

HotNews.ro wanted to know from the ASF if there were Romanians who ended up with less money in their accounts than they contributed, given that the value of Pillar II assets has fallen significantly this year amid the crisis and the decline in quotations of government securities in which pension funds invest approximately two-thirds of their managed funds.

We remind you that according to Art. 135 pt. (2) of Law 411/2004, “the total amount of private pension cannot be less than the value of paid contributions, reduced by fines and court costs.”

To ensure that people at least get their contributions paid into the system, the law requires pension fund administrators to maintain a level of technical reserves at all times corresponding to the financial obligations arising from the prospectuses of the administered private pension schemes.

For the final data analysis, ASF sent HotNews.ro only the cases of participants who collected their money from Pillar II for the age limit in the first 6 months of this year.

• “Cases of disability, death and benefits related to regularization or contributions transferred after the payment conditions have been met have not been taken into account because they are special cases that do not allow for comparison.” ASF stated.

We would like to remind you that currently payment for personal property of a Level II Participant can be made in a one-time payment or in installments over a period of up to 5 years.

• “In the period 01.01.2022 – 06.30.2022, they applied for the payment of property as a result of fulfilling the conditions for retirement at the maximum age. 5896 participantsof them, 58% required a one-time payment, and 42% – in installments.
• The total amount of transferred contributions participants who demanded payment of the asset as a result of fulfilling the conditions for retirement according to the maximum age in the period 01.01.2022 – 06.30.2022, amounted to 118.90 million lei.
• Total value of invoices to the previously mentioned participants, calculated on the date of conversion of fund units, amounted to 156.06 million lei.
• From the total value of the account were detained CASS, income tax and bank commissions or mandate fee, as the case may be, in the amount of 17.16 million lei.
• The total amount actually collected by participants who demanded payment of the asset, as a result of fulfilling the conditions for retirement at the maximum age in the period 01.01.2022 – 06.30.2022 amounted to 138.92 million lei.”, This was reported by ASF representatives.

2.9% of nearly 5,900 Romanians received less money than they transferred after paying CASS and income tax

However, ASF figures show that not all Romanians came out winners when they withdrew their money from the second tier through CASS and income tax withholding.

• “In the period 01.01.2022 – 06.30.2022, more than 87% of the total number of participants who retired during this period received an investment result before deduction of taxes and commissions from 10% to 50%. After taxes and fees, more than 65% of retirees achieved returns between 10% and 50%.
• After deducting CASS, income tax and bank charges for only 2.90% of participants who retired due to the age limit, the investment result was negative,” the ASF said.

The authorized body explained that “in most cases, the total value of the account of the participants on the date of payment was higher than the total guaranteed value for the participants who demanded the payment of assets as a result of retirement, a fact that did not determine the direction of the use of technical support amounts.”

• “The exception was the case of 3 participants, for whom a negative investment result was recorded before withholding CASS, income tax and bank commissions/commissions, and for them the total amount paid from technical support was 5483.42 lei.
• The main reason for fixing such a result was that for these participants, the contributions were remitted within a short period of time, most of the contributions were collected in the period of 2021-2022, which is not enough time to accumulate a positive investment result.
• Although the investment result was positive, in the case of 2.90% of participants who claimed benefits as a result of meeting the retirement conditions for the maximum age, after deduction of social health insurance contributions and income tax, the actual amounts were lower than the total value of the contributions transferred.” , ASF stated.

How many Romanians had less in their accounts than they contributed, and with what money the administrators came

ASF data shows that administrators received more than 7,500 lei from technical reserves to cover the difference between the invoice value and the guaranteed value.

“Of the 5,896 participants who applied for payment of property as a result of retirement at the maximum age, the following exceptional situations arose:

• In the case of 149 participants who received payment of personal property in the period from 01.01.2022 to 06.30.2022, the employer recalculated the contributions, which led to the formulation of requests for additional payment for these differences. Among them, a negative investment result was recorded for 87 participants related to contributions transferred after retirement, which is associated with a short accumulation period, when it is necessary to cover the difference between the accounting value and the guaranteed value in the amount of 2,058 from the technical support. 19 lei.
• For a separate case (part of the contributions was withdrawn by the CNPP, but the amounts related to the shares inherited from the deceased participant were collected), the total amount paid from technical support was 5.88 lei.
• Only in the case of 3 participants, for whom most of the contributions were collected during 2021-2022, a very short accumulation period, for which the total value of the personal account was lower than the guaranteed value, the total value paid from technical support was 5483.42 lei. Therefore, the total sums incurred by the administrators for the participants who requested payment due to retirement due to the maximum age in the period 01.01.2022-06.30.2022 amounted to 7,547.49 lei.”, this is shown in the ASF responses.

Administrators have more than 900 million lei to pay the amounts guaranteed by law in the second level

In order to cover the amount guaranteed by law to Level II participants, administrators of private pension funds are obliged to create technical support at the expense of their own funds.

This maintenance is used if the value of the member’s personal assets falls below the amount of contributions paid to the member during the active period, less transfer penalties and legal fees.

How much money did Pillar II administrators put into these technical reserves?

• “The total value of the reserves formed by Level II administrators, accumulated as of 08/31/2022, is 909.60 million lei.”, ASF stated.

How much the administrators paid from provisions for 12 years: More than 142,000 lei

Answering the question about what other payments from technical reserves have been made by administrators since the functioning of the II level of pension provision, ASF presented the following situation:

• “According to the available data relating to the period 2011-2022, out of 38,231 participants who applied for the payment of an asset as a result of retirement at the maximum age, a number of 2,739 participants were paid the amount of 142,830.67 lei from technical support.
• Most of the cases represent payments from the technical reserve for amounts transferred after a request for payment of net personal assets, respectively for amounts related to contributions after the initial payment, corrections received from the accounting institution, for which the period of accumulation of contributions was very short.”, according to the ASF.

Read more also:

• What payments were made in the second level of pensions in the first six months: 70% of Romanians preferred lump sum payments instead of gradual payments
• APAPR: Tier II has recovered more than half of this year’s decline. Net profit for Romanians – 18.9 billion lei for 14 years
• Reduction of the II level of pensions: how much money Romanians who retired received in the first 5 months, and what guarantees the law provides

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