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Romania allows alternatives in pensions

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ROMANIA - Pension funds in Romania are now allowed to invest in private equity and commodities - to some extent.

The supervisor CSSPP has put in place new investment regulations both for the mandatory second pillar as well as the voluntary third pillar.

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.

There is the limit of 3% investment in commodities and derivatives and investment on US markets is now allowed.

A CSSPP spokesman listed "crude oil, cotton, coffee, grain, copper, aluminium, zinc, precious metals traded on regulated specialized markets in the EU and US" as examples of commodity investments .

The cap for both asset classes is set at 5% each for third pillar pensions.

These new investment regulations are intended to strengthen the prudent person principle investment in the supplementary pension system as well as diversification.

"CSSPP has decided to allow the introduction of new types of investments in the Pillar 2 and Pillar 3 for the purposes of risk dispersion and a broad diversification of the investment portfolio," said a spokesman to IPE.

He added: "Fund managers can protect their portfolios against currency and interest rate risk through specific instruments only if these types of investments have the purpose of minimising risk and help to design an efficient investment portfolio."

Meanwhile, market sources have told IPE there are government plans to forego the planned contribution increase for this year.

Contributions to the second pillar were set to increase continuously from the 2% they started off at in 2008 to 6% 2016 with a 0.5 percentage point increase annually.

Sources noted the Romanian pension fund association APAPR fears a negative effect on the asset growth of pension fund companies in the second pillar and is planning protest.

The association itself was not available for comment at the time of publication.

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