ASF: New regulation on private pension scheme market, a decisive step towards Romania's joining OECD

  Romania is taking a decisive step towards joining the Organization for Economic Cooperation and Development (OECD) after the government adopted on Wednesday a regulatory act aimed at amending the legislative framework governing the private pension scheme market, the Financial Supervisory Authority (ASF) said in a release."The regulatory act adopted by the government amends the legislative framework governing the private pension scheme market, regarding mainly: rendering investment limits more flexible, according to OECD recommendations; the possibility for pension funds to invest in assets traded on regulated and supervised markets in OECD member countries; offering participants the possibility to choose their pension fund depending on the desired level of risk and taking into account the implementation of certain strategies whereby the investment portfolio is adapted according to the participant's age (e.g. funds that automatically adjust the investment risk as the participant approaches retirement age)," the release states.According to the ASF, the amendment of the provisions regarding investments, specifically the creation of the possibility of investing in assets issued/traded in states adhering to the liberalization codes and the flexibility of investment limits, according to OECD recommendations, aims to mobilize investments to finance growth and innovation. Both the higher flexibility of investments and the diversification of the investment area will have a stimulating impact on the development of capital markets.The administrators of privately managed pension schemes (Pillar II) and of voluntary pension schemes (Pillar III) will be able to allocate up to 10%, respectively 15% of assets in equity issued by collective investment undertakings in transferable securities from Romania or from other countries. Thus, by increasing the exposure limit in these financial instruments, the premises for the development of the local market and the financing of the economy are created."The adoption of this legislative project marks a milestone for the evolution of Romania's private pension system and for our path towards joining the OECD. The recommendations formulated by international experts reflect a rigorous assessment of the progress made so far, but also of the necessary steps we must take in the coming period. We are ready to strengthen risk-based supervision and support a modern, flexible and transparent regulatory framework, for the benefit of all participants in private pension schemes," declared Alexandru Petrescu, president of the Financial Supervisory Authority.The OECD assessment highlighted both Romania's commitment to adopting OECD legal instruments and the alignment of national policies and practices with the best international standards in the field of private pension schemes.The Emergency Ordinance adopted by the government on Wednesday, based on the recommendations made by OECD experts, amends and complements the provisions of Law No. 411/2004 (on privately managed pension schemes), Law No. 204/2006 (on voluntary pension schemes), as well as of Law No. 1/2020 (on occupational pension schemes).Other newly introduced legislative amendments aim at: introducing the OECD liberalization codes - capital movements and invisible current operations as legal reference instruments; expanding market access for managers and lending institutions from OECD member states; simplifying the conditions of access to voluntary pension schemes, by eliminating the requirement of a minimum number of contributions; strengthening the supervisory capacity of the ASF, in order to protect the interests of participants and market stability.According to the ASF, through these measures Romania reinforces its commitment to align the private pension system with the highest international standards and to effectively protect the taxpayers' interests, making strides toward OECD accession, a major goal of the Romanian foreign policy.