Born to fund
Starting in Chile more than 25 years ago, private pensions have now made their way to Romania. On the eve of the birth of a new industry, Corina Mica talks to ING Fond de Pensii general manager Radu Vasilescu
Spending two weeks in short trousers in South America was not on the agenda of ING Fond de Pensii general manager Radu Vasilescu when he decided to pay a visit to the continent one July ten years ago.
“If in our part of the world July is one of the hottest months, it snows in South America and the airline lost my luggage,” he recalls. “I had to spend a large part of my visit there in Summer clothes.”
But the chilly visit paid off, as it was a research endeavour meant to enrich his knowledge of the advantages and drawbacks in the private pensions system.
A decade later, Vasilescu leads pension fund ING Fond de Pensii with a declared aim of becoming the leader in an emerging industry in Romania.
In 1996 Vasilescu was heading the treasury marketing unit of the local office of Citibank.
“Back then, I was involved in a project to find long-term financing sources for the bank, and private pensions caught my attention,” says Vasilescu. “It was the time when Citibank wanted to tackle the Polish market and that was when I first came in contact with the field of private pensions.”
“When the law was first drafted, expectations were high, but I did not exactly have time to see them going through, as nothing really happened for the next five years,” says the general manager.
But now, in his new capacity, Vasilescu leads a team of almost 40,000 sales agents with an ambition to woo one million clients for the Pillar II of the newly introduced private pension law in Romania. This is targeted at people under 35 years-old, who are now compelled by law to join a private pension fund administrator.
“The main criterion for choosing a private pension company is first and foremost the image that company puts out,” he says.
“International recognition and word-of-mouth recommendation also play an important role in making such a choice, but in the end it comes to studying the actual offer one company puts on sale. This is where a well-prepared sales agent comes into play, because it is also up to them to present the most accurate information.”
Private pension: why now?
Romania is the last country in EU’s central and eastern Europe (CEE) to launch private pensions. The system was first introduced in Chile back in 1981 and spread through South American countries before hitting the CEE region in late 1990. Countries such as Latvia, Hungary, Poland, the Czech Republic, Bulgaria and Ukraine are now veterans in running this system, which should guarantee a higher pension and subsequently decent living standards for retired people.
“Although there have been discussions in the past about the introduction of such a system in Romania, only this year things have gotten into motion,” says Vasilescu. “There is a new piece of legislation in place, which makes it mandatory for people under 35 to join one pension fund, and voluntary for those between 35 and 45.”
ING Fond de Pensii boasts that it was the first private pensions fund administrator to receive authorisation from the special Commission to Supervise the Private Pensions System in Romania (CSSPP). The company now aims for a leading market share of 30 per cent in the mandatory private pensions (Pillar II) and reach a 25 per cent on the voluntary private pensions (Pillar III) market in the first year of operations.