Pension funds in Romania not affected by international financial turmoil

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Money of participants in the private pension funds in Romania are safe and the problems on the international financial markets and those encountered by some international financial giants, shareholders of the companies administrating pension funds in Romania, do not affect the activity of the pension funds, representatives of the Private Pensions System Supervisory Commission (CSSPP) told on September 16.
 
„They are distinct companies, registered separately. Losses cannot be transferred from one side to another. Funds administrators are entitled to give instructions where the money are to be placed. It is even less risky than in the insurance field”, said head of CSSPP Communication division Dan Zavoianu.
 
Referring to the evolution of American International Group (AIG) on the bourse in New York, CSSPP stressed that Romania-based AIG Pension Fund SA, the administrator of AIG privately administered pension fund, has as its main shareholder AIG Life Insurance Romania SA, company supervised and controlled by the Insurance Supervisory Commission (CSA).
 
According to CSA, the solvency and liquidity indicators of the two Romanian insurance companies which have as significant shareholders companies within American AIG group – respectively AIG Life Insurance Romania SA and AIG Romania SA Insurance Company – are meeting the requirements stipulated by the valid prudential rules.
North-American financial giant AIG has recently filed for aid from the US Central Bank, for a 75 billion dollars loan and the Dutch insurer Aegon announced on Tuesday it has an exposure of 265 million euros as a result of Lehman Brothers bankruptcy.
 
AIG and Aegon are present on the pension market in Romania through AIG Pension Fund and BT Aegon Pension Fund.
Standard & Poors and Moodys down rated AIG, which makes less likely that FED would grant the loan asked for by the largest world insurer, now on the brink of bankruptcy.
 
„American financial crisis does not endanger Romania’s private pensions market. Financial difficulties the US big financial companies are passing through, present in one form or another on the private pension funds in Romania, do not affect the privately administered pension funds or participants’ contributions. The private pension system in Romania lays the accent on the participants’ safety and the most important safety elements in this system derives from legislative protection offered to the respective participants”, CSSPP says in its release.
 
Due to the organization of this system, by separating the pension funds assets from the administrators’ ones, participants’ contributions are protected against any difficulties encountered at a given moment by the private pension funds administrators or their shareholders, CSSPP said. The commission pointed out that a depository bank is held accountable together with the optional pension funds administrators in case of a financial crash. All private pension funds must have a depository bank. This one is in charge with keeping safely and daily calculation of the net value of pension funds assets, as well as with running fund accounts operations, in conformity with instructions received from the administrator.
 
The depository bank has the obligation to block every transaction that fails to observe the law.
If it is not doing so, the investors can ask for damages. The depository bank is fully responsible in solidarity with the fund administrator in case of a financial crash.
As well, according to the legislation in force, no operation with fund assets can be carried out without the depository accord, institution which is held accountable with the administrator by the participants in the fund and which is supervised and controlled by BNR. Other safety elements of the private pension system in Romania include financial auditing, transparency and reporting obligations, actuarial report, technical provisions, steady supervision and control activity conducted by CSSPP.
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