CSSPP asked the Ministry of Finance for variable deductibility on voluntary pensions, up to EUR 2,000 per year
The Private Pension Supervisory Commission (CSSPP) submitted a notification to the Ministry of Economy and Finance (MEF), requesting the increase of the fiscal deductibility for voluntary private pensions (pillar III) up to a maximum of RON 3,500 per year (EUR 1,000 per year), both for the employee and for the employer, stated Mircea OANCEA, president of CSSPP, for www.privatepensions.ro.
"The deductibility I proposed is expressed as a percentage from the income, denominated in RON, based on the participants' income. I also estimated this measure's expected impact on the budget, a simulation of the pension that can be obtained by applying various contribution options and contribution periods and I presented data about the experience of neighboring states that stimulated this system mainly by fiscal deductibility, thus making saving more attractive", said the president of CSSPP.
Consequently, CSSPP proposed the following fiscal deductibility system to the Ministry of Finance: For the EMPLOYER: contributions to a voluntary pension fund (as salary benefits) shall be deductible within the following maximum limits: - 20% of the gross income, if the gross income of the employee is less than or equal to RON 1,500 per month; - 15% of the gross income, if the gross income of the employee is between RON 1,500 and 3,000 per month; - 10% of the gross income, if the gross income of the employee exceeds RON 3,000 per month; BUT NO MORE THAN 3,500 RON per year for each participant.
For the EMPLOYEE (or any individual participant): the contributions to a voluntary pension fund shall be deductible within the following maximum limits: - 20% of the gross income, if the gross income of the participant is less than or equal to RON 1,500 per month; - 15% of the gross income, if the gross income of the participant is between RON 1,500 and 3,000 per month; - 10% of the gross income, if the gross income of the participant exceeds RON 3,000 per month; BUT NO MORE THAN 3,500 RON per year for each participant.
Thus, fiscal deductibility for contributions to the voluntary private pension system can reach, in theory, RON 7,000 per year. This means EUR 2,000 annually - assuming the employee has a gross monthly income of over RON 3,000 and pays, together with the employer, the maximum contribution in order to reach the proposed limit of RON 3,500 + 3,500.
According to the CSSPP calculations, adopting this deductibility system proposed for pillar III might have an impact on the budget, lowering the taxable amount by approximately RON 325 per year, namely an annual decrease of RON 52 million (about EUR 15 million) for the state budget revenues. The estimation is based on a number of 200,000 participants to the system per year and on a gross average income equal to the national average value per economy.
At the beginning of this week, Varujan VOSGANIAN, minister of economy and finance, stated that the ministry is considering an increase of the fiscal deductibility for the contributions to the voluntary private pensions "from simple to double, at least, namely a minimum of EUR 400 per year, both for the employee and the employer", specifying that this measure is currently analyzed by the ministry. At the moment, Romania has the lowest fiscal incentives for the voluntary private pension products in Europe.
