Finance
Romania's top court strikes down OECD-required private pension law
Published by Global Banking and Finance Review
Posted on November 25, 2025
2 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on November 25, 2025
2 min readLast updated: January 20, 2026
Romania's court rejects a private pension law, affecting the country's OECD membership plans and investment climate.
BUCHAREST (Reuters) -Romania's Constitutional Court struck down on Tuesday a bill regulating withdrawals from the private pension system, complicating Bucharest's plans to join the Organisation for Economic Co-operation and Development (OECD) next year.
The coalition government hopes that membership of the OECD, a club of wealthy nations, will attract more investment and reassure markets that the economy is on the right track despite Romania having the largest budget deficit in the European Union.
The bill - a requirement for OECD membership - would allow Romanians to withdraw a third of their private pension funds on retirement and get the rest in tranches for up to eight years.
It was challenged in court on grounds that it interfered with private property rights.
The court will explain its decision to overturn the bill at a later date. The government is expected to revise the legislation, taking into account the court's objections.
Romanians under a certain age have had to contribute to private pension schemes since 2008 in addition to state pension contributions. The seven private pension funds are now the largest institutional investors on the Bucharest Stock Exchange.
Those funds held assets worth 170.8 billion lei ($38.72 billion) at the end of June, up 19% on the year, data from Romania's financial supervision authority showed.
Fund managers will face large withdrawals from 2030, when just under 2 million people - a 10th of the population - born under a communist-era abortion ban will reach retirement age, increasing the burden on the pay-as-you-go state pension system.
The bill struck down by the court was intended to provide greater predictability for fund managers.
Romanians are currently allowed to withdraw the entirety of their private pension assets as a lump sum when they reach 65.
($1 = 4.4116 lei)
(Reporting by Luiza Ilie; editing by Gareth Jones)
A private pension is a retirement savings plan that individuals can contribute to, separate from state pensions, often managed by financial institutions.
The Organisation for Economic Co-operation and Development (OECD) is an international organization that promotes policies to improve the economic and social well-being of people worldwide.
Pension withdrawals refer to the process of taking money out of a pension fund, typically upon reaching retirement age, to support living expenses.
A budget deficit occurs when expenses exceed revenues, leading to a shortfall that must be financed through borrowing or other means.
The Bucharest Stock Exchange is the main stock exchange in Romania, where securities, including stocks and bonds, are traded.
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