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Pension plans in Bucharest

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The Romanian State Pension Plan is fighting high imbalances in the contributors to beneficiaries ratio, due to a drop in the country's natality during the last two decades and an ever-increasing number of Romanian citizens who choose to work abroad. For this reason, the competitiveness of the Romanian pension is extremely low by comparison to other EU countries.

In order to cope with the increased pressures on the system, the Romanian state pension system has been reorganized in 2007, and divided into three components: the state pension fund, the privately administered pension funds and the supplementary pension funds. However, at this moment, the pensions are disbursed exclusively out of the state pension fund.

Romanian State Pension Plan

In order to be eligible for a Romanian pension, the person must pay a minimum of 15 years of contributions to the State Pension Plan, and a minimum of 35 years for a full pension. The retirement age is 65 years for men and 63 years for women.

If the person has already made the mandatory full contributions, including additional contributions for up to eight years, the pension may be claimed up to five years before the legal age of retirement. In this case, however, the value of the pension will be diminished by a percentage ranging from 0.15 - 0.5% depending on how much time in advance the contributor requests the pension.

Special conditions apply for military personnel, which are part of a separate state pension plan.

Contributions are deducted from the employee's pay, and as additional payments made by the employer. As of 2017, the minimum value of the monthly pension is RON 520 (approximately 115 euros), but the actual value is based on a calculation that takes into account the value of the existing contributions, the number of years in service and other factors.

In order to claim the state pension, the person must file a formal request with supporting documentation with the National Public Pension House (Casa Națională de Pensii Publice).

Privately Administered Pension Plan

Affiliations to the privately administered pension funds are compulsory only for people under the age of 35, and optional for people under 45, and they are made through the the employer. Persons over 45 cannot become affiliated to a privately administered pension plan. When a person is affiliated to a privately administered pension fund, the mandatory legal payments for social security are split between a contribution to the state fund and one for the privately administered fund. This does not imply additional payments to be made neither by the employee, nor by the employer.

In order to subscribe to a privately administered pension fund, the contributor must sign a written document outlining the conditions of the plan, as well as the investment policies of the fund. All funds are regulated by the Romanian Financial Surveillance Authority.

At this moment, subscribers cannot make any claims for private pensions yet, as the system has only been functioning since 2008.

Supplementary Pension Plan

Supplementary pension plans are currently offered by most financial institutions regulated by the Financial Surveillance Authority, and are available either as company benefit packages, or can be subscribed to independently by employees or self-employed people, regardless of age.

The supplementary pensions are optional, and contributions are made in addition to the minimum social security contributions set out by the law for both the employee and the employer. The total amount of the monthly contributions can be up to 15% of the person's gross income, however these are tax deductible only up to a limit of 400 euros per year.

Supplementary pensions may be claimed after the age of 60 and only after at least 90 monthly contributions. The conditions for claiming the pension are specific to each pension plan, and are set out in the subscription documents.

Expat Pension Plans

Collecting pension in Romania is more complicated for foreign citizens. As the country is part of the EU, payments made to the pension systems of other EEA countries (EU + Iceland, Norway, Switzerland and Lichtenstein) can count towards the contribution period in any member state.

EU Nationals

The claim for the EEA state pension should be made in the last country of employment where contributions for social security were paid. That country is responsible for processing the claim and bringing together the payment records in all the other countries where the person has worked.

If the retiree is entitled to pensions from more than one country, the national and EU rules will be applied to calculate the combined pension. With each institution calculating the amount of the state pension depending on the payments made to its social security plan.

A few other countries have a bilateral agreement with Romania that allow for years worked in Romania to count to their State pension. Inquire with your state plan about the particulars.

If your country does not allow for years worked in Romania to count toward your state pension, there may be an opportunity to buy back time once you have returned to your home country and are once again contributing to the pension plan. Again, inquire with your state plan about the particulars.

Update 24/04/2017


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