BRATISLAVA, August 7, (WEBNOVINY) — The pension system is financially unsustainable in its current form; the second pillar will not be able to provide sufficient income and it devalues people’s savings. Prime Minister Robert Fico said this on Tuesday, commenting on the ongoing parliamentary debate on the draft amendment to the Social Insurance Act. „We consider it very appropriate that we are changing the pension system, which is financially unsustainable,“ Fico said after an extraordinary meeting of his Cabinet on Tuesday.
The prime minister went on to say that he respects that there are political forces in parliament, which have a different opinion on the solution that the government brings, but by their defense of the current configuration of the second pension pillar, the opposition de facto fights for lower future pensions and depreciation of pension deposits of savers. The prime minister maintains that at the current setup, in three years, i.e., after ten years of functioning of the second pension pillar, pensions from it would be about 18 percent lower than from the pay-as-you-go pillar operated by the social security provider Socialna Poistovna. Moreover, this figure assumes that the pension fund management companies would appreciate savers’ deposit over the next three years at least at the level of inflation, which is currently not the case.
Fico further supports his conclusions claiming that during its existence, the second pension pillar depreciated the value of pension savings by nearly 12 percent when inflation is taken into account. „That is how peoples’ pension contributions were appreciated over years of operation of the second, private, pension pillar. Simply said, the second pension pillar does not even earn as much as inflation,“ said Prime Minister Fico. He further pointed out the fact that during the same period, pensions paid from the first pillar have been valorised by almost 17 percent.
Parliament on Monday approved the Cabinet’s proposal for accelerated legislative proceedings for changes in the first and second pension pillars. All 81 MPs present for the SMER-SD voted in favor of the proposal, the opposition did not participate in the vote.
After the vote, opposition MPs displayed a black banner with a white text SMER-SD = thieves of pensions.
The Cabinet of Robert Fico asked parliament for accelerated procedure on this draft bill on Monday last week. It claims that because of worse than anticipated development of public finances, it wants to reduce contributions savers pay to the second pension pillar from 9 percent to 4 percent of gross wage one month sooner that originally planned, from the beginning of September, and not the beginning of October. The earlier approval of lower contributions to the second pension pillar will bring EUR 40 million to Socialna Poistovna.
SITA
