Sallas plan finds golden mean for banks’ pension fund scheme

The thorny problem of reforming the banking sector’s fragmented social insurance and pension fund system, which has been the subject of consultations between employers, staff and government the last few weeks, is said to be only hours away from its final solution. The catalyst seems to have been a plan submitted by Piraeus Bank President Michalis Sallas last week, which kicked off an new intensive round of consultations. Behind the polemic rhetoric at the nationwide meeting of the Federation of Bank Employees’ Unions (OTOE) representatives on Friday, there was a widespread feeling that change was afoot. The phrase, «we are perhaps heading for a unified solution,» that was heard by a prominent union leader provided the signal for frenetic deliberations over the weekend. On Monday morning, a draft was on the desk of Economy and Finance Minister Giorgos Alogoskoufis. The 2 billion euros that the government is to receive according to the scheme is, under the present fiscal conditions, like manna from heaven. Another boon is that the scheme contains no unpopular measures. The minister met with the board of the Hellenic Bank Association (EET) at midday and on Tuesday the prime minister instructed Labor Minister Panos Panayiotopoulos to convene a round table on the pressing issue. Conditions for a solution seem to have never been more ripe. The transparency required by the compulsory implementation of international accounting standards (IAS) by listed companies in the European Union as of 2005; the danger of a bank collapsing under the weight of social insurance liabilities which have to be listed against equity capital; the search for a comprehensive solution sought by the banks themselves and the responsible stance of the unions have all contributed to the maturation of a solution. The advantage of the Sallas proposal, compared to previous ones, is that it sets out terms agreeable to all three sides: government, banks and union, and that it accepts OTOE’s demand for «maintenance of the (existing) social insurance system.» The Sallas plan provides for the setting up of a single auxiliary pension fund and does not affect the retirement ages, contributions and pensions of the large majority of bank employees. However, early retirement is restricted, especially of the recently hired. For the banks, the plan solves the potential problem of the implementation of IAS by transferring their pension fund liabilities to the Social Security Foundation (IKA). For the government, it helps lighten its fiscal deficit, as banks will contribute 2 billion euros, or 50 percent of the actuarial cost of the single auxiliary pension fund, and this is accounted for as public revenue. The remaining 50 percent will be paid by the government over a period of 30 years – an average of 68 million euros per year. Separately, Deputy Economy Minister Petros Doukas said Greek banks are sound and profitable and can meet the cost of a solution to their pension fund problem.