Auxiliary fund discussed for private sector


TAGS: Finance

A new fund providing auxiliary social security to about 2 million workers in different professions in the private sector has been the focus of talks among social partners, employer associations and the General Confederation of Greek Labor (GSEE), which have now entered an advanced stage.

According to the latest blueprint being worked on, the new National General Collective Labor Contract will contain a clause providing for this auxiliary fund, known as the Second Pillar. It will also make it obligatory, supplementing the services provided by the mandatory First Pillar of social security.

The new fund will operate on a capitalization system of predetermined contributions. The ultimate benefits, i.e. auxiliary pensions, will depend on the returns achieved. They could be disbursed either in the form of a monthly allowance or as a lump sum at retirement, depending on each worker’s preference.

According to the social partners, even a contribution of 2 percent of gross salaries (1 percent by the employer and and equal amount by the employee) would generate significant amounts when the fund reaches maturity. This capital could also gear  productive investments and growth. However, main obstacle is its funding by employers and workers, who would be burdened further.