On 26 September the Private Pensions System Supervisory Commission (“PPSSC”) Norm no. 13 of 2012, regulating the actuarial calculation of the technical provision for privately managed pension funds (the “Norm”), was published in the Official Gazette. The Norm sets forth the rules regarding the calculation, verification, establishment, investment and utilization of the technical provision for privately managed pension funds.

The Norm provides a complete standard methodology of calculating the technical provision, intended to assure a better convergence between the technical provision calculated by the privately managed pension funds administrators (using internal or partially internal methodology) and the technical provision as determined by the PPSSC using the standard methodology.

The administrators of privately managed pension funds now have the possibility of choosing to apply the internal or partially internal methodology instead of the standard one. However, the latter methodology will be officially used by the PPSSC to estimate the technical provision reported by each administrator and the amount of the minimal technical provision for each fund.

The technical provision is calculated annually, as at the first day of the year for the current year. The PPSSC has the legal right to require at any time the recalculation of the technical provision, if the evolution of the assessed risks requires so. The level of the technical provision as required by the Norm should be reached by the administrators within a period of 6 years, by annual increase of the assets corresponding to the technical provision, as per PPSSC indications.

The Norm also details the structure of mandatory and additional optional warranties to be provided by the administrators to the participants of privately managed pension funds.

The aforementioned text is for information purposes only and must not be construed as legal advice, nor relied upon as enforceable legislation.