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The seven mandatory private pension funds manage assets worth 84.4 billion lei ($20.2 billion) for just over 7.6 million contributors. Those are primarily held in state treasuries and the stock market, where they are the largest institutional investors.
“It is increasingly becoming a challenge, new listings of … large, profitable, quality companies are absolutely necessary for continued investment on the local capital market,” Radu Craciun, president of Romania’s private pension association, told Reuters.
“If we don’t get local investment alternatives then attention towards foreign markets will likely increase as they have the liquidity the local bourse no longer provides,” said Craciun, who manages one of the seven funds, BCR Pensii.
With a stock market capitalisation of around $33 billion, the Bucharest bourse ranks among the smallest in central and eastern Europe and badly needs diverse offerings.
Initial public offerings in state-owned energy producer Hidroelectrica and other state holdings were delayed by legislative changes last year, which are in the process of being reversed.
BCR Pensii has bought into two regional private equity funds this year run by BlackPeak Capital and Ceecat Capital, the first Romanian pension fund to do so.
Romania overhauled its indebted, communist-era pension system in 2008, making it mandatory for all working Romanians under 35 to contribute to private pension schemes as well as their state pension.
Romanians will increasingly rely on private pensions particularly after 2030, when many of those born in a boom after a communist-era abortion ban in 1966 reach retirement age.
The centrist coalition government has said it will raise employee private pension contributions to 4.75% of gross wages from the current 3.75% by 2024, but has yet to detail a plan.
($1 = 4.1793 lei)
