Romania – Update on private pensions legislation

On 25 April 2014, the Official Gazette published two norms amending and supplementing the regulatory framework of private pensions in Romania, namely: (i) Norm 7 of 2014 of the Romanian Financial Supervisory Authority (the “FSA”) for the amendment of and supplement to Norm 11 of 2007 regarding the financial auditor of privately managed pension funds and of these funds’ administrators (“Norm 7/2014”); and (ii) Norm 8 of 2014 of the FSA for the amendment of and supplement to Norm 8 of 2006 regarding the financial auditor of voluntary pension funds (“Norm 8/2014”).

The main updates brought by the norms are as follows:

(i) For privately managed pensions (i.e. Pillar II):

1. The provisions of Norm 7/2014 are applicable starting with the current financial year (i.e. 2014).
2. The maximum period of time for which a privately managed pension fund and/or an administrator of such fund can be audited by the same financial auditor is five years.
3. An audit report must contain express references to the following to indicate compliance of the relevant privately managed pension fund and the fund’s administrator with the legislation:

- Calculation and evidence of the commission fees in relation to marketing activity;
- Calculation and evidence of the administrator’s income as regulated by Law 411 of 2004 regulating privately managed pension funds (“Law 411/2004”);
- Calculation, conversion and evidence of participants in the privately managed pension fund;
- Calculation and evidence of the management fee paid by the privately managed pension fund to the fund’s administrator;
- Calculation and evidence of the assets of the privately managed pension fund, including outstanding dividends;
- Calculation and evidence of the collection and payment operations undertaken through the accounts of the privately managed pension fund;
- Calculation and evidence of the transfer of participants to other privately managed pension funds;
- Calculation and evidence regarding the utilisation of the fund participants’ net assets in the case of death or invalidity of the participants;
- Calculation and evidence of the fund’s technical reserves, the categories of assets admitted to cover technical reserves, and the diversification rules for the assets admitted to cover technical reserves;
- Calculation and evidence of the minimum return for each participant in the fund, determined in accordance with the provisions of Law 411/2004.

(ii) For voluntary pensions (i.e. Pillar III):

1. The maximum period of time for which a voluntary pension fund and/or an administrator of such fund can be audited by the same financial auditor is five years.
2. The provisions of Norm 8/2014 are applicable starting with the current financial year (i.e. 2014).
3. A financial auditor must perform a financial audit of the annual financial statements of a voluntary pension fund in accordance with the international audit standards as adopted by the Romanian Financial Auditors Chamber. Moreover, the financial auditor must respect the provisions of the Ethics Code of Professional Auditors, as adopted also by the Romanian Financial Auditors Chamber.
4. An audit report must contain express references to the following to indicate compliance of the voluntary pension fund with the legislation:

- Calculation, conversion and evidence of the participants in the voluntary pension fund;
- Calculation and evidence of the management fee paid by the voluntary pension fund to the fund’s administrator;
- Calculation and evidence of the assets of the voluntary pension fund, including outstanding dividends;
- Calculation and evidence of the collection and payment operations undertaken through the accounts of the voluntary pension fund;
- Calculation and evidence of the transfer of participants to other voluntary pension funds;
- Calculation and evidence regarding the utilisation of the participants’ net assets in the case of deaths or invalidity of the participants;
- Calculation and evidence of the fund’s technical reserves, the categories of assets admitted to cover technical reserves, and the applicable investments dispersion rules.