ROMANIA - Mandatory second pillar pension funds in Romania have generated a 14.6% average positive return since the start of the year, according to the latest figures from the Romanian Pension Funds’ Association (APAPR).

Data compiled by the pension body reveals net assets under management for second pillar pensions now amount to RON2.12bn (€493m) while voluntary contribution third pillar funds had doubled their assets compared with this last October to RON181m.

The actual return generated by second pillar pension funds hit 14.6% within the first 10 months of this year and 18.7% for the last 12 months, while third pillar pensions delivered an average return of 12.7% from the beginning of this year or almost 15% since 1 November 2008, against 12-month CPI (Consumer Price Index) inflation of 4.3%.

The Romanian pensions market still runs a relatively conservative portfolio strategy and the bulk of assets are held in fixed income and money market investments, in part because local pension funds are restricted in their investment capabilities by the regulator, CSSPP.

Pension funds in the second pillar can now invest up to 2% of their assets in private equity in Romania, the EU or other European countries outside the bloc. And there is the limit of 3% investment in commodities and derivatives, while investment on US markets is now allowed.

Second pillar funds now have a total of 4.86 million members, of which a third have joined on a voluntary basis, said APAPR.

And ING is still the dominant player in both sectors, as ING has a 33% market share in second pillar pensions while ING Optim has a 25.8% market share in the third pillar regime. Allianz and ING look after half of all second pillar pension plans as between them they manage assets for 2.85 million people.

The voluntary pensions regime was launched in May 2007, ahead of the second pillar in May 2008, even though it was supposed to be the other way around.

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