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Employers must inform their new employees under 45 of Pillar II of private pensions

Employers have a new obligation: To inform new employees under the age of 45 about joining a mandatory private pension fund (Pillar II).

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The new obligation for employers in Romania is given by Order No 585/2 July 2021 on the modification and completion of the framework model of the individual contract of employment, listed in the Annex to the order of the Minister of Labor and Social Solidarity No 64/2003 (Official Gazette No 712, Part I, 19 July 2021) and consists in informing new employees up to 45 years of age about joining a compulsory private pension fund (Pillar II).

The employers’ obligation is intended to inform, from 19 July 2021, all the employees referred to in Article 30 of Law No 411/2004, which governs Pillar II of private pensions, namely:

  • employees under 35 (for which membership is mandatory to Pillar II);
  • employees between 35-45 years old (for which accession is optional).

Employees under the age of 35 in their first job have a legal obligation to choose their second-pillar pension fund within the first 4 months of entering the labor market. Those who do not choose the pension fund to which to contribute, are randomly allocated by the national public Pension Fund (CNPP) to one of the 7 Pillar II funds. If they are not in their first job, they do not have to choose their pension fund, and they are already integrated into Pillar II.

In order to support employers and relieve this new administrative burden, the Association for privately administered Pensions in Romania (APPR) has prepared a model letter that employers can download from https://apapr.ro/scrisoarea-de-informare-conform-ordinului-585-2021/ and send it to all employees.