ECONOMY

New auxiliary fund offers new option

new-auxiliary-fund-offers-new-option

The new Auxiliary Capital Insurance Fund (TEKA) will allow executives to invest contributions while each insured individual will be able to choose between three types of investments, with different levels of risk, according to the draft law of the Labor Ministry that has been put to public consultation for the next two weeks. 

Apart from the investment program, there will be at least one more for the more cautious and another for more daring investors.

Moreover, each insured person will have the opportunity to change the investment program every three years, either to increase or to reduce investment risk. 

TEKA will manage its own investments but will be able to enter into contracts for the management of part of its assets and with external managers.

The fund will be supervised by the Labor Ministry, the National Actuarial Authority and the Hellenic Capital Market Commission.

The goal is to have the bill submitted and voted through by Parliament in July. 

According to an impact report accompanying the draft law, “Insurance Reform for the New Generation,” the aim is to “ensure workers a standard of living that is not substantially different from what they had during their working life, as well as the provision of a sustainable social security system, with the implementation of the capitalization system of predetermined contributions.”

In practice, the auxiliary fund is regulated on the basis of the financial system of capitalization of predetermined contributions. At the same time a fund is established to manage the operation of the new auxiliary insurance fund in the form of a legal entity under public law.

​​​​​​An individual account is created for each TEKA-insured person. The account will record the paid contributions, due contributions, as well as the returns from the investment of the contributions along with the deductions.

The assets of the fund will be invested and the management of TEKA will be tasked to ensure the sufficient diversification of the portfolio and the selection of quality investments.

It is also stressed that excessive dependence on a specific item or group of companies should be avoided, as well as excessive accumulation of risks in the portfolio as a whole.