Romania's new second pillar funds received their second tranche of contributions last month, representing their income flow from April. Together with the first contributions, those for March which were paid in May, the pension fund asset management companies had an income flow of RON191m (€52m).

The payments data, released by the National House of Pensions (CNPAS), show the market is highly concentrated, with ING gaining a nearly 40% market share by contributions and 33% by participants, Allianz-Tiriac with 23% and 26%, Generali ranked third with nearly 8% and more than 9%, and Aviva, Interamerican and AIG each holding 6-7%.

And there has already been a market shakeout. Of the original 18 companies licensed to manage pension funds, four - Zepter, Marfin, AG2R, MKB Romexterra - decided to exit the market before the money was distributed because they had failed to gain enough adherents and their total of 4,000 clients were redistributed among the other players. In addition, BT Aegon is expected to acquire OTP Private Pensions while Prima Pensie is the subject of interest from both BT Aegon and Interamerican. At least one other takeover is understood to be in the pipeline for this year and further consolidation in the sector is foreseen for next. However, the timings are unsure because, although the supervisor has agreed a fund merger norm, it is considered too difficult to apply by the fund managers.

But existing regulations bar players with more than 20% of the market merging with others for the next three years. This at least implies that there can be mergers among those with less than 20%.

The number of members was unexpected. The system is mandatory for employees aged 34 and under, and voluntary for those aged 35 to 45. It had been anticipated that voluntary participation would be quite low, and that total membership would reach 2.5-2.8m adherents out of a potential pool of 4.5m, because the reputation of investment funds has been tainted by past financial scandals. In the event, some 4.1m opted to join, including 80-90% of those aged over 35.

This means the companies have limited growth prospects - new clients are restricted to new entries to the labour market, those aged between 35 and 45 who have not yet decided to participate in the system, defections from other funds or the acquisition of other funds. In the four months between the end of the initial four-month marketing period, and in January and May, only 5,000 new people joined the system.

This suggests the current rankings will not be changed easily and is bad news for those who emerged from the initial marketing campaign at the bottom of the league, but it would appear to be a vote of confidence in the system.

Romania is the latest of the east and central European states to implement its pension reform, adopting a version of the World Bank model seen throughout the region from Estonia to Bulgaria, but it has been a problematic process.

The changes were initially planned for the early 1990s but political and administrative ineptness meant legislation was not adopted until late 2004. That in turn proved unfit for purpose and a final version was not passed until December 2006.

Then the licensing process for the private pension asset management companies took longer than anticipated, as did the development of an IT system to ensure the collection and delivery of contributions.

Nevertheless, the marketing of second pillar pensions began last September, initiating a four-month so-called Big-Bang marketing period.