Pension lottery

Romanians under 35 may decide for themselves on how much money they will get after retiring. But the choice depends on both intuition and luck.
The new system of privately administered pensions was launched yesterday and it is compulsory for young employees. Each of them is to subscribe to one of the 14 funds accepted in the system by January 17, 2008. This is optional for those Romanian employees aged between 35 and 45.
Pension funds estimate a yearly growth if 5-7% of the accumulated sum, but they may as well use the future retireds' money for bad business. The law guarantees only the money paid in the course of time, minus the commissions. The latter are 2,5% of the monthly contribution at most plus 0,05% of the money already in the fund.
Inflation isn't going to be taken into account. Take a contribution of 20 Euro a month in 30 years, for instance. In such case the pension will reach 135 Euro a month.
Varujan Vosganian, Romanian's economy minister, says the state pension system will survive for a time. He promises that, no matter the employer's conduct, the contribution to the private pensions will be paid. It starts from 2% of the gross wages and it is to reach 6% in 8 years' time.
President Basescu: A reasonable political compromise
The launch of the private pension system is a "reasonable political compromise", a satisfying, but an insufficient one. It was the President of Romania Traian Basescu who expressed this opinion in yesterday's conference "September 17, 2007 - Start of Compulsory Private Pensions in Romania", arranged by "Ziarul Financiar" (the Financial Daily).
According to the President, the launch of the private pension system is "the first action striking the paternalist state bad". The Romanian President argued that the private pensions could become an incentive for Romanian economy and citizens' welfare, provided that the political factor granted the conditions necessary for the private pension funds to have a positive evolution.
President Basescu highlighted how important the transparent administration of these funds would be. (...) And he commented more: "I think the establishing of the private pension system can stimulate fairness on the labor force market so that some of those participating in the private pension funds would become vigilant guardians of the correct registration of wages and other payment in employment documents".

Ovidiu Banches & C.S.
Ziua Marti 18 Septembrie 2007 http://www.ziua.net/english