The mergers must be approved by the Competition Council

The Supervision Commission of the Private Pension System (SCPPS) prepares the project of a norm concerning the mergers and the acquisitions from the private pensions fund market. Through this, the administrators will be able to merge in the way to don’t exceed a market share higher than 20%. Also, the norm will only admit the participation of the administrators that have at the most 10% market share, but an outturn at least at the average outturn of the market to further allocation.

The measures are meant to limit a strong concentration of the market, even if this is visible for the moment as number of participants. According the competition law, the concentration level of a market is being analyzed in base of the turnover or in case of Pillar II of the contribution volume that are in administration, „The merger and acquisition mechanism, for us as for the European Union too, assumes the theoretical approval of an entity which supervises the competitive conditions from the market.  Any merger or acquisition from the private pension market should be approved by the Competition Council, because by law it has this mandate”, Radu Vasilescu, General Director of ING Pension Fund, stated.

The possibility of transfer

In case of merger of two funds with different investment risks, the participants who don’t approve the new risk can transfer. A transfer of hundreds or thousand of persons must be limited by the individual transfers approved by the system. „ If the Competition Council approves it the merger of two entities that doesn’t exceed 20% of the market, can’t be considered intervention on the market”, Vasilescu added.

The norm which will settle the fusion and acquisition process must be discussed both with the Competition Council as with the fund administrators. It should stipulate the different treatment of the complex situation of the mergers between administrators, as trading company and the ones of merger between funds. „The take over of some funds by another administrator should have distinct settlements. However, the neighbor countries experience which started the Pillar II more ahead us and have already accomplished a certain concentration of the market, by mergers and acquisitions, can be useful for us”, Radu Vasilescu considers.  

The same concentration also after the aleatory allocation

The persons who didn’t adhere to a private pension fund will be assigned according the actual system, proportional with the market share obtained by the administrators in the initial adhesion campaign. Although there have been several pressures in order that the aleatory assignment from the end of February to advantage the small funds, the Government decided to remain the same the law in force. The number of registered and validated participants by the National House of Pensions and Other Social Insurance Rights (CNPAS) rose to 3,991 million of persons. To these another 300.000-500.000 employees under 35 years old will be added, which will enter in the assignment procedure of the persons who didn’t adhere to any fund. By the proportional assignment, the market shares obtained by funds won’t suffer major changes.  The administration of 98% from the market is concentrated in the hands of 10 companies. According to CNPAS estimations, those 18 private pension fund administrators will collect 71-72 millions lei in May, at the time when it will take place the first transfer of the relevant contributions of registered employees.