Romania’s mandatory second-pillar pension funds, as elsewhere in the region, generated lower returns in 2015, although all seven funds managed to produce positive results.

According to the Romanian Pension Funds’ Association (APAPR), the annual average weighted returns of the second-pillar funds fell to 3.68%, from 8.71% a year earlier.

Mihai Bobocea, adviser to the APAPR board, attributed the fall to a “historically low interest-rate environment and stagnating stock exchange quotations”.

In 2015, the turnover of listed companies on the Bucharest Stock Exchange declined by 23% year on year in local currency terms, and there was a dearth of IPOs compared with 2014.

Second-pillar membership over the year grew by 4.2% to 6.56m, and net assets by 29.1% in Romania leu terms to RON24.7bn (€5.5bn).

The contribution rate, which remained unchanged at 5% of gross wages, rose to 5.1% in 2016.

Investment remained primarily domestic.

There were minor shifts in asset allocation, with the share of government bonds falling by 2.1 percentage points to 65.9%.

Investment in municipal, supranational and corporate bonds also declined.

Meanwhile, the share of listed equities grew by 0.2 percentage points to 19.2%, that of cash and deposits by 1.1 percentage points 6.5%, and that of mutual funds by 0.5 percentage points to 3.7%.

Bobocea told IPE asset picking rather than asset allocation could explain why the funds avoided year-end negative returns.

The 10 voluntary third-pillar funds told a similar story, with the annual return falling from 7.45% to 2.54%.

Membership grew by 10.4% to 382,318 and assets by 20.4% to RON1.3bn.

The investment profile was similar to that of the second pillar – government bonds accounted for 64.9% of the total, other bonds 8.5%, listed equities 19.3% and cash and deposits 4.5%.

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