ECONOMY

Doubts arise over effects of proposed pension fund law

The passage of legislation on bank employees’ main and auxiliary pension funds, which, until recently, was expected to sail through Parliament, despite the objections of unions and opposition parties, has become more complicated. It is not only the mounting resistance of unions, including, besides the usual strikes, challenges in court against the legislation, which gives the government pause, but also doubts expressed by bankers themselves over whether the proposed solution will work to their advantage. (The government wants to bring forward the induction of bank employees’ main pension funds into the Social Security Fund (IKA) to 2006 from 2008 and merge the 11 auxiliary pension funds into one public entity, which means that the government will cover any deficits but also gain control over the integrated fund’s operations. Pensions will also be reduced.) The individual banks’ unions are now preparing a legal counteroffensive on the lines of government trampling over collective labor agreements. There is also increasing skepticism among government officials over the efficiency of the proposed changes. Top managers at Emporiki Bank have also expressed their disappointment with the proposed measures, as they consider that the solution offered will actually increase the bank’s burdens. (The issue has arisen because of new International Financial Reporting Standards mandating the recording of provisions for pensions and severance payments as liabilities on listed companies’ financial statements. The application of IFRS is expected to negatively affect banks’ financial results, especially those with the biggest deficits in the employees’ auxiliary pension funds, such as Emporiki and Agricultural banks). The draft law is being prepared by the Ministry of Employment and Social Protection. However, ministry sources say that the input of Deputy Minister Nikos Angelopoulos has not been sought and that the proposals have been drafted by a legal adviser to Minister Panos Panayiotopoulos and a subordinate of Angelopoulos’s who has not briefed her immediate superior on the process. In a gesture of solidarity yesterday, there were stoppages organized by the General Confederation of Greek Labor (GSEE). It and ADEDY, the Civil Servants’ Union, participated at a central Athens rally outside of bank employees’ offices. OTOE, the bank employees’ umbrella union, said that should the government’s proposed legislation pass there would be thousands of cases brought by individual employees. GSEE announced a strike for next Friday. OTOE executive member Dimitris Tsengenes told reporters that, contrary to the government’s reassurances, even those hired before January 1, 1993 would lose out in the proposed changes.