Officials from the Netherlands, the US, Italy, Switzerland and Great Britain Chamber of Commerce in Romania, as well as representatives of the Foreign Investors Council (FIC) addressed an open letter to the Romanian authorities on Tuesday, underlining the unresolved compulsory private pensions system (pier II) issues, and the level of contributions or the initiative of guaranteed inflation.

This is the second international action. In February, ambassadors representing the Netherlands, Germany, Italy, Great Britain and the US reacted against the proposal to freeze the 2% contributions to this system.

"Through this open letter, we are trying to point the Government's attention towards the existent and future issues in the pensions system. It is our belief that, should the Government not return to the initial contributions to the Pier II private pensions schedule, this would affect the current Romanian income earners and will also have a negative impact on the entire Romanian economy. Foreign investors that set up private pensions funds administration companies here are losing their trust in this system and in Romania, if these reforms are not going to be carried on in the same form they have been outlined at the start of the system", The Netherlands Chamber of Commerce in Romania executive manager Nuria Simon Artigas declared.

The lack of an exact schedule for the increase of the Pier II contribution affects both the participants and the pensions administrators' businesses. The foreign authorities underline that "in Romania currently functions the private pensions fund with the most reduced contribution level worldwide (2%), while the private pensions funds obtained the best investments results in the world from their launch in May 2008 and up to present.

The letter recounts the fact that, according to the law addressing the private pensions' system, the contributions' level should have increased by 0.5% annually, from 2% gross income in 2008 to 6% in 2016. But in February 2009, the Romanian authorities decided to freeze this contribution to 2%. In April 2009, Romanian officials declared that the contribution level will go up to 2.5% in 2010 and to 6% in 2016 (according to the initial schedule). This means that the contribution's level needs be raised by 1% in one year.

The only statement made by the Romanian authorities mentioned that this increase will happen in the first year recording economic growth. The private pensions funds administrators' association (APAPR) estimates shows that the decision to freeze the contribution to 2% attracted losses worth of around 83 million euros.

The current unstable schedule to increase the contribution for the pensions seriously affects the funds' administrators plans. They were expecting to retrieve some of their 500 million euros investment in the Pier II system within 10 - 12 years. "A decrease of the system's actives level leads to a decrease in incomes and a longer period to reach the break even", the letter shows.

Another issue addressing the law regarding the compulsory private pensions specifies that the system needs to entail an annual minimum outturn guaranteed for the pensions in the Pier II, equal with the annual inflation rate. Such a guaranty would be impossible, technically speaking, the foreign authorities say, reminding the fact that the Romanian Central Bank missed all the inflation forecasts within the last three years.