Radu VASILESCU: The private pension market will breakeven within more than 10 years
Private pension companies shall breakeven on all the investments made for the system's launch within a timeframe of over 10 years, in average, as stated for the www.privatepensions.ro portal by Radu VASILESCU, former CEO of market leader ING Pension Fund, in his first interview for the press after his resignation last week. "The market shall get a return on its total investments, namely reach the breakeven point, within a timeframe of over ten years", he said, assessing the results after the first three months of collecting contributions in the mandatory private pension funds.
This data is not sufficiently conclusive to make longer term estimations about the revenues of the pension funds from the administration fees charged to the clients. According to previous estimations, the private pension companies invested approximately half a billion euros last year and in the first half of this year in order to launch the operations and attract customers to their pension funds. The investments will continue in the following years as well, without being so considerable, and will be fully recovered within more than ten years, according to the estimates of former CEO of the market leader.
The Romanian private pension market's impossibility to recover the investments within less than ten years is not an isolated case in Central and Eastern Europe. POLAND, the largest mandatory pension market, with almost 14 million participants and assets of over 41 billion euros, shall only reach the breakeven point for the private pension market this year, meaning precisely the tenth year after its launch in 1999.
The Polish pension companies made huge investments in the first three years after launching the system (1999-2001), when they spent over 720 million euros in total (2.9 billion Polish zloty). For the next six years, the pension companies reported cumulated profits of 2.6 billion zloty - the remaining amount to be recovered this year. Thus, the Romanian market would repeat the Polish experience, as it followed closely the Polish model so far, except for some processing/IT errors from the beginning.
Radu VASILESCU resigned from the management of ING Pension Fund last week, making a decision that surprised the entire market. "I want to stay close to the private pension market and launch my own financial consulting company, to run various contracts and consulting projects both for the private pension industry and for other financial markets", said VASILESCU. The head of the ING Pension Fund is now Emilia BUNEA, former CFO of ING Life Insurance (for almost one year) and CFO and vice-CEO of Interamerican (for the seven years prior to joining ING).
