How private pensions will be paid: “Payment peak is estimated in 15 years. We can deal with payments”- explanations of fund administrators

The law of payment of private pensions does not have any justification in terms of the possibility or impossibility of pension funds to make payments, because the funds are very liquid and can cope with the pension payments, said Radu Crăciun, the president of the APAPR (Association of Private Pension Administrators), quoted by News.ro.

Radu Crăciun, the president of APAPR, said on Monday in a press conference that “the payment peak is estimated in 15 years”, but that the administrators can cope with payments.

“In 2025, the contributions that enter are somewhere at 22 billion lei, the payments we make today are 2 billion lei. It is a great discrepancy between the volume of contributions and that of the pensions. Sure, it will change. But the money entries will be sufficient to make the payments even in that payment peak. It is not possible that the value will be. Payment is estimated in 15 years.

He stressed that the draft law, analyzed on Friday in the first reading of the Government, was designed by collaboration between the Ministry of Labor and ASF, and APAPR offered consultations in certain situations. Radu Crăciun has recalled that in the last 10 years the association he runs has reported the lack of this payment law.

How private pensions will be paid. Different rules if the amount on your account exceeds 15,300 lei

The president of the APAPR explained how the private pension was to be paid according to the new draft law.

We recall that the over 9 million Romanians who have private pensions (Pillar II, mandatory and Pillar III, optional) will not be able to withdraw all their money once, after obtaining the retirement decision, as at present, but a maximum of 25% of the amount, and the rest, monthly for a period of 10 years or throughout a life, according to a life, There is also an exception: if you have less money than “12 times the value of social allowance for retirees in the public system” (equivalent of 15,372 lei at the end of last year).

“If the amount is below 15,372 lei, ie 12 months or 1,281 lei (Na social allowance), then the payment will be unique or staggered for a maximum of 12 months,” said Radu Crăciun.

Things change when the amount accumulated in your private pension account exceeds this threshold.

“If the amount is over 15,372 lei, each will decide if it wants a unique payment of 25%. Then, the next step, they will choose a payment mode: scheduled withdrawal or life pension. A supplier of the type of product chosen, the suppliers will not be obliged to have both types,” he said.

What does scheduled withdrawal mean? What money will you be able to receive monthly

Scheduled withdrawal type pension It represents the value paid monthly to the limb until the full reimbursement of the personal asset held by it in the payment fund, but not more than 10 years. According to the proposal in the law, the monthly amount would be 1,291 lei, as much as the value of the social allowance for the pensioners in the public system. However, if you have more money in your account that can be staggered for 10 years, then this will allow you to have monthly tranches than 1,291 lei.

“If the amount is up to 153,720 lei, ie 1,291 lei x 12 months x 10 years, then the future pensioners will receive the amount of 1,281 lei for x months = the amount/1.281 the last month is adjusted for the yield. If the amount is greater than 153,720 lei, you can choose any monthly pension you want (without upper limit). 300,000 lei in the pension account, the person can double their pension, not only 1,281 lei.

What does life pension mean? If you live less, the remaining amount does not inherit

“The life pension guarantees a payment for the entire duration of life, and no matter how much you live, and no matter how little you live. The risk of longevity is taken by the payer. If you live longer, you can take more money than you have contributed. The pension is no longer limited by the amount contribted. Christmas.

Why was the 25% percentage chosen for single payment?

The president of the Association of Pension Fund Administrators argues that the decision to choose this percentage is related to trying to achieve a balance between the incumbent needs that people can have when they retire and ensuring a medium -term balance of life.

“The model is not different from what is practiced in other countries, with variants, some with 20% as a percentage. The countries that have a system similar to ours, Poland, Croatia, all have this system of withdrawing part of the amounts,” said Radu Crăciun.

He claims that at present, someone who had an average salary on the economy and contributed for 18 years, has about 50,000 lei in the account.

“You get about 3 years of retirement. The vast majority will not reach those 10 years, the vast majority will consume their pension money before 10 years. Why 10 years? People relate to life expectancy, which takes into account child mortality. The correct reporting must be to the life expectancy, which is 14 years old, which is for the age of 10 years, which is for the age of 10 years, which is for the age of 10 years, which is for the age of 10 years. it.

“The misfortune of this law”

The president of the APAPR also stressed that “the misfortune of this law is that it was presented on an emotional background, when the government took other measures with impact on the population.”

“ASF has started to work 3 years ago to work this law. It is a moment like any other and completes this circle of the law of private pensions. I heard that the law was given to help the budget deficit. The law will not be applied at least a year and a half. But even after a year and a half, the payment fund will invest a part of the amount in the securities and a part in the bank. State, can we talk about help for the state budget? ”Said Radu Crăciun.

In his opinion, the administration commission of 0.05% proposed for the payment funds is similar to the commission that the administration funds had during the accumulation period.

“18 years ago, the administration funds applied a commission of 0.05%. Because the funds were small, as amounts, and the costs were high. This commission is identical to the commission that the administration funds applied at the beginning of the system,” said the APAPR chairman.