Until February 2020, the Romanian legal framework regarding pensions followed the three-pillar model generally promoted by the World Bank.

However, a recent enactment (i.e. Law no. 1/2020 on occupational retirement provisions) that entered into force on 7 February 2020, transposing Directive no. 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision, has introduced a fourth pillar into Romania’s legal framework on occupational retirement provisions.

Characteristics

From the perspective of the employer-employee relationship, the following characteristics of the occupational retirement provisions should be noted:

• fourth-pillar occupational retirement provisions are optional and can be implemented by each employer, under the conditions provided by law;
• the occupational retirement provisions represent an amount paid periodically, in addition to public and private pension;
• the employer is entitled to propose an occupational retirement provisions scheme to its employees via a collective bargaining agreement or, in absence of such an agreement, via the individual employment agreements of the employees; for such purpose, the employer will sign a management contract with an authorised management company and the employees will fill in a request to participate in the fourth pillar.
• an employer that envisages implementing a fourth-pillar scheme for occupational retirement provisions is compelled to offer this type of benefit to all employees; the employer cannot condition the conclusion of an individual employment agreement to participation in such a scheme;
• an occupational retirement provisions fund can be incorporated and managed by an entity authorised by the competent Romanian authority (i.e., the Financial Supervisory Authority) or by an EU/EEA competent authority;

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