Romanian government approves pension reforms with eye on OECD

Romanians will be limited to withdrawing 30% of their private pension funds upon retirement and will receive the rest in tranches for up to eight years under a bill approved by the government on Thursday.

The bill, which will now be sent to parliament, is a requirement for Romanian membership of the Organisation for Economic Co-operation and Development (OECD), the club of wealthy nations, which it hopes to join in early 2026.

The EU member state overhauled its communist-era pension system in 2008, making it compulsory for working Romanians under 35 to contribute to a so-called "second pillar" of private pension schemes in addition to their state pension.

Under the scheme, more than 8 million Romanians contribute to seven private pension funds, which have become the largest institutional investors on the Bucharest Stock Exchange.

Romanians are currently allowed to withdraw the entirety of their private pension assets as a lump sum when they reach the retirement age of 65.

A draft version of the reform unveiled earlier in August would have allowed Romanians to withdraw a quarter of their private pension funds upon retirement and choose scheduled withdrawals for up to 10 years or lifelong monthly installments.

The OECD will assess Romania's private pension system next month as part of the country's candidacy to join the grouping.