Occupational Pension Scheme
Sistemul pensiilor ocupaționale
Coverage
Voluntary participation
- Employees, civil servants, appointed or elected individuals, members of cooperative companies and others that derive income-related earnings, persons acting as their own employers (incl. self-employed); plans provided mostly by employer, often based on collective agreement or individual employment contracts.
Financing
General finances
- Fully funded schemes financed from contribution payments and capital revenues.
Contribution payments
- Contributions can be paid by employer or shared between employee and employer (proportions vary depending on scheme’s provisions, the contract concluded between the employer and the administrator and the individual act of accession).
- Employees’ contributions depend on concrete pension plan (maximum amount of contribution payments): no more than 1/3 of monthly gross earnings; the total amount of social security deductions may not exceed 50% of the monthly salary.
- Employees can cease contribution payments and retain their rights in accordance with the pension plan conditions (unless transfer of accumulated capital to another fund has been requested).
- Employer may determine differentiated amounts of contribution payments based on employees’ seniority, function or salary entitlements.
State support
- Contribution payments are recognised as expense deductible from the tax base.
Administration
- Pension plan providers (pension companies, investment management companies, life insurance companies) manage pension funds and pay benefits directly to the eligible person.
- The ‘Supervisory Commission of the Private Pension System’ licenses, oversees and sanctions the pension plan providers.
- The ‘Private Pension Guarantee Fund’ compensates losses to persons and beneficiaries, both during the period of capital accumulation and after the pension entitlement, if caused by the inability of managers or pension providers to meet their obligations.
- Employer collects and transfers contributions; employer’s responsibility is limited to the payment of the agreed contribution amount.
Qualifying Conditions
- Participants are entitled to occupational pension benefits in accordance with the pension plan conditions and the legislation on the payment of private pensions.
- Exceptionally, upon the participant`s request, entitlement to pension benefits may start at the time the participant reaches the standard retirement age of the statutory old age pension scheme.
Benefits
Pension payments
- Primarily based on the amount of contributory earnings, length of contribution period and capital revenues.
- Monthly life-long annuity; if monthly payments are below threshold: one-time lump-sum payment of 100% possible, or instalment payments for a maximum period of 5 years, upon request.
Taxation and social security contributions on pension payments
- Taxable pension income is subject to 10% income tax (the taxable pension income is determined by deducting the monthly non-taxable amount of RON 2,000 from the pension income).
- Pension benefits are not subject to social security contributions.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Voluntary participation
- Employees, civil servants, appointed or elected individuals, members of cooperative companies and others that derive income-related earnings, persons acting as their own employers (incl. self-employed); plans provided mostly by employer, often based on collective agreement or individual employment contracts.
General finances
- Fully funded schemes financed from contribution payments and capital revenues.
Contribution payments
- Contributions can be paid by employer or shared between employee and employer (proportions vary depending on scheme’s provisions, the contract concluded between the employer and the administrator and the individual act of accession).
- Employees’ contributions depend on concrete pension plan (maximum amount of contribution payments): no more than 1/3 of monthly gross earnings; the total amount of social security deductions may not exceed 50% of the monthly salary.
- Employees can cease contribution payments and retain their rights in accordance with the pension plan conditions (unless transfer of accumulated capital to another fund has been requested).
- Employer may determine differentiated amounts of contribution payments based on employees’ seniority, function or salary entitlements.
State support
- Contribution payments are recognised as expense deductible from the tax base.
- Pension plan providers (pension companies, investment management companies, life insurance companies) manage pension funds and pay benefits directly to the eligible person.
- The ‘Supervisory Commission of the Private Pension System’ licenses, oversees and sanctions the pension plan providers.
- The ‘Private Pension Guarantee Fund’ compensates losses to persons and beneficiaries, both during the period of capital accumulation and after the pension entitlement, if caused by the inability of managers or pension providers to meet their obligations.
- Employer collects and transfers contributions; employer’s responsibility is limited to the payment of the agreed contribution amount.
- Participants are entitled to occupational pension benefits in accordance with the pension plan conditions and the legislation on the payment of private pensions.
- Exceptionally, upon the participant`s request, entitlement to pension benefits may start at the time the participant reaches the standard retirement age of the statutory old age pension scheme.
Pension payments
- Primarily based on the amount of contributory earnings, length of contribution period and capital revenues.
- Monthly life-long annuity; if monthly payments are below threshold: one-time lump-sum payment of 100% possible, or instalment payments for a maximum period of 5 years, upon request.
Taxation and social security contributions on pension payments
- Taxable pension income is subject to 10% income tax (the taxable pension income is determined by deducting the monthly non-taxable amount of RON 2,000 from the pension income).
- Pension benefits are not subject to social security contributions.
Legal Basis: Law No. 1/2020 regarding occupational pensions (Legea nr. 1/2020 privind pensiile ocupaționale); Law No. 227/2015 regarding the Fiscal Code (Legea nr. 227/2015 privind Codul fiscal).