Romania’s Constitutional Court blocks OECD-required private pension law
Romania’s Constitutional Court on Tuesday struck down a bill regulating withdrawals from the private pension system, a measure required for the country’s planned OECD membership next year.
The legislation would have allowed retirees to withdraw one-third of their private pension funds immediately and receive the remainder in installments over up to eight years. It was challenged in court for interfering with private property rights. The government is expected to revise the law in line with the court’s objections, News.Az reports, citing Reuters.
Romania’s coalition government hopes OECD membership will attract investment and signal stability, despite the country having the largest budget deficit in the EU.
Contributions to private pension schemes have been mandatory for certain age groups since 2008, in addition to state pensions.
Romania’s seven private pension funds are now the largest institutional investors on the Bucharest Stock Exchange, holding 170.8 billion lei ($38.7 billion) in assets as of June, a 19% increase from last year.
Fund managers face future challenges, with large withdrawals expected from 2030, when nearly 2 million retirees born under a communist-era abortion ban reach retirement age.
Currently, retirees can withdraw the entirety of their private pension assets as a lump sum at age 65, a practice the struck-down law sought to modify.
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