BRATISLAVA, May 27, (WEBNOVINY) — The Cabinet Office strongly opposes the legislative plan to remove guarantees from existing pension funds in the second pension pillar. The Cabinet Office informed the Ministry of Labor, Social Affairs and Family on its stand during the interdepartmental review of the draft revision to the law on old-age pension saving. “With regard to certain risks of the suggested changes related to scrapping guarantee in the growth and balanced pension funds being in conflict with the constitution, we suggest preserving existing pension funds in their current form,” stated the Cabinet Office.
The Cabinet Office agrees with establishment of a new equity-linked index fund as the Labor Ministry suggests. Besides that, it requires establishing another new non-guaranteed mixed fund. “Without existence of such fund, savers could only choose from guaranteed schemes with a low equity-based component, which does not cover the whole spectrum of preferences of savers for the level of investment risks,” the Cabinet Office reasoned the suggested establishment of a non-guaranteed mixed fund. The office recommends extension of the period of monitoring performance of investments from six months to five years for all funds or for every fund individually, for example seven years for the growth fund, five years for the balanced fund and three years for the conservative fund, to secure the possibility of a higher return on investments.
Within interdepartmental review of the respective draft bill, the Finance Ministry is asking the Ministry of Labor, Social Affairs and Family to postpone the automatic entry of young people first entering the labor market into the second pension pillar by two years, from January 1 of 2012 to January 1 of 2014. The ministry reasons its proposal by the need to consolidate public funds. The Finance Ministry said that in line with the government’s program statement, it is important to considerably decreasing the current general government deficit, with the ambition to squeeze it under three percent of GDP in 2013, in line with Slovakia’s commitments to the EU resulting from the Stability and Growth Pact. The ministry considers its remark to the draft bill fundamental.
SITA
