OTOE rejects bank pension plan

Bank workers yesterday rejected, as expected, a proposal by employers for a solution to the problem of their unfunded social insurance liabilities and the integration of pension funds in the sector. The issue has become pressing due to the requirement of International Financial Reporting Standards (IFRS) – which all listed companies have to adopt this year – that such liabilities be written down on banks’ balance sheets. For some banks, particularly Emporiki and its auxiliary pension funds, these liabilities are so large that they pose a risk of seriously eroding their capital base. The proposal, delivered to the Federation of Bank Association Employees (OTOE) by the chairman of the Hellenic Bank Association (HBA) and Alpha Bank president Yiannis Costopoulos, envisages that all bank workers will be insured for their main and auxiliary pensions with the Social Security Foundation (IKA), and that a special public organization will be set up to provide the additional benefits originally planned for those employed before January 1, 1993. Costopoulos said the HBA proposal was a last chance for the problem to be solved as a whole – rather than on the basis of each individual bank. «Let us not lose this opportunity… We all stand to gain if this gangrene is removed. It will be a crime if we cannot solve it, but it will not be the end of the world, either,» he said. Responding to the HBA plan, OTOE said its provisions would lead to an increase in the retirement age of a large number of bank workers, to pension cuts for those who were employed after 1992, and to uncertainty as regards the size of the additional benefits for those hired before 1993. It argued that this uncertainty originated in the fact that the plan did not provide for clear funding of such benefits and the auxiliary pensions, as the public organization envisaged for this purpose would depend financially on the state, which could alter its contributions for the worse in due course. OTOE also said it was opposed to burdening IKA with the large cost of the scheme – which should be mainly borne by the banks themselves – and insisted on its own proposal for a separate single auxiliary pension fund for all bank workers. The government so far has acted as mediator in the issue, urging banks to come to an agreement with OTOE and assume a large part of the cost of a single scheme. Otherwise it will proceed with separate settlements in the two banks in which it still has sizable holdings, Emporiki and Agricultural.