Romanian austerity measures threaten second pillar
ROMANIA - The Romanian finance ministry is seeking to cut the contribution rate to the second pillar from 2.5% to 0.5%, but is facing opposition from the country's pensions industry.
The proposed cut is part of the severe austerity measures currently being negotiated to meet the budget demands made by the International Monetary Fund (IMF).
More than a tenth of the gross income of Romanian employees is currently diverted to the pension system, with 8% going to the first pillar and 2.5% to the second pillar. (See earlier IPE-story: Conservative Romanian pensions continue to make gains)
Mihai Bobocea, secretary-general of the Romanian pension fund association APAPR, said that lowering the contribution rate of the second pillar by two percentage points would effectively "bankrupt the whole system".
He added: "We are fighting hard to prevent this measure."
Bobocea expects a decision to be made on the subject by the end of next week.