First season of transfers between mandatory pension funds begins in two weeks
First season of transfers between mandatory pension funds (2nd pillar)
begins in two weeks - on the 1st of August, CNPAS will process the
first round of transfer requests. Pension fund managers expect the
procedure to go along smoothly and they believe the transfer activity
would be quite small. Mandatory pension fund participants can opt to
transfer to another fund at any time, but their request will only be
processed and applied four times a year - on the 1st of February, May,
August and November.
If a participant switches funds within the first 2 years after adhesion, he will pay a 5% penalty fee (applied to his net asset in his personal account) with the occasion of the transfer.
Pension companies say that the little time that elapsed since the system’s inception doesn’t give clinets enough reasons for transfer. “We expect transfer activity to be small both because it is very early since the start of the 2nd pillar and also given the time of year”, said Shah ROUF, CEO of the AVIVA group in Romania.
“It’s possible that we’ll see more transfers from small to big pension funds, but other than some brokers’ interests to move clients around to get fees, I don’t see why anyone would switch funds so early. A too active transfer market is disadvantageous to all players and I think we could also see CSSPP intervening to temper things down, should it be the case”, emphasizes Eugen VOICU, CEO of AVIVA Pensions.
"We do not foresee a large number of transfers between funds, at least in the first two-three months of activity. In other countries the transfer rate is somewhere between 2%-3% on a market level. We hope Romania will have a similar percentage once things stabilize. We think the investment performance of the pension fund and the service of the pension company should be the major reasons influencing transfers", comments Besim JAWAD, CEO of INTERAMERICAN Pensions.
"We are worried that, in practice, transfers can also take place because agents could try to earn some more commission by moving their clients around between administrators, however. It is therefore important that we make sure that a participant knows the consequences exactly of being transferred and also that it is clear that it is really the wish of the participant to transfer and not somebody else’s wish", JAWAD also noted.