September 7, 2017 / 3:56 PM / in 9 months

Romanian government could make private pension scheme optional: PM

BUCHAREST (Reuters) - Romania’s Social Democrat government could make a mandatory private pension scheme optional from 2018, Prime Minister Mihai Tudose said on Thursday.

FILE PHOTO: Romania's Prime Minister Mihai Tudose at the Cotroceni Palace in Bucharest, Romania June 29, 2017. Inquam Photos/Octav Ganea/via REUTERS

Romania overhauled its communist-era pension system in 2008, making it compulsory for working Romanians under 35 to contribute to a “second pillar” of private pension schemes as well as their state pension.

But Tudose said last month the European Union state was analyzing whether to cut contributions to the private pension scheme to redirect some of the funds into state coffers.

“I think the solution we are heading toward is to tell the population, based on their salary levels, where it is best to keep their money,” Tudose told local television station Digi24. “No one is dismantling the second pillar, tormenting or torturing it, but it will be optional.”

Just under 7 million people were contributing to second- pillar private pension funds, whose assets totaled 36.06 billion lei ($9.28 billion) at the end of June, or the equivalent of more than 4 percent of gross domestic product.

Reporting by Luiza Ilie

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