For a Romanian now earning the economy-wide average gross wage, the lifetime private pension in the mandatory system (pillar II) is likely to range between 127 euros and 232 euros, depending on the yields funds generate, as well as on participants' gender.
A 30-year old man earning the average economy-wide gross wage could get a lifetime mandatory private pension of 155 euros or 232 euros, in case the fund he joined had an average annual yield of 5% or 7%.
At the same time, a 30-year old woman earning the same wage will have a mandatory private pension of 127 euros or 190 euros, depending on the annual yield of the fund, according to some ZF calculations.
Simulations take into account a starting age of 30 years and a retirement age of 65, under the law. For the period during which the pension is received, simulations take into account a slight increase in life expectancy, from 77.6 years for men and 80.4 years for women (at present) to 82.3 years for men and 84.8 years for women (35 years from now).
Why do women get smaller pensions than men? Because women live longer than men on average. As a result, despite contributing equal sums from equal incomes for 35 years, a man and a woman may get different pensions because the period statistically left until the participant's death is taken into consideration. However, private pensions could be much higher, given that simulations take into account a fixed gross wage for the entire saving period, of 35 years.
Next year's economy-wide gross average wage is put at 472 euros, of which 2 percent will go in the first year to private pension funds.
At the same time, simulations take into account a constant average RON/EUR exchange rate, at a level similar to the current one.
But how will private pensions vary depending on where participants work, in a state-owned entity or in the private sector?
According to some ZF estimates based on National Statistics Institute data, the average gross wage in state-owned companies is likely to reach 628 euros next year, compared with the 429-euro wage in the case of private companies.
While the state registers the entire income of its employees as wage, private companies tend to avoid tax payment by resorting to various methods.
As a result, wages declared by private companies are much smaller than the ones the state pays to its employees. But a smaller wage means smaller contributions and implicitly smaller pensions.
By law, managers of mandatory private pensions are forbidden to present such yield or private pension estimates depending on current incomes to participants in the system.
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