ECONOMY

Changes in pension law

Economy and Finance Minister Giorgos Alogoskoufis said yesterday he was prepared to accept changes in his draft proposals on the integration of bank employees’ auxiliary pension funds, insisting that the core of the reform would remain intact. Alogoskoufis was forced to change his stance following a blistering critique of certain provisions in the draft bill by veteran MP Miltiadis Evert, a former leader of the ruling New Democracy party. According to Alogoskoufis’s aides, the minister was prepared to accept Evert’s suggestion that the banks pay any dues to the integrated auxiliary pension fund with interest. Alogoskoufis himself told reporters that Evert’s amendment was «totally within the spirit» of the initial government legislation. However, Evert on Tuesday specifically attacked some main provisions in the draft bill, saying that the people were being called to finance private bankers and foreign investors. Evert was especially scathing about the provision that exonerates foreign funds who are bank shareholders from paying their share of banks’ debts to the Social Security Foundation (IKA). «Why should the foreign funds be exempt? Does IKA have so much money that it can forgive debts?» Evert asked. The former New Democracy leader, who had used Alogoskoufis as his economic advisor, also attacked the lack of actuarial studies that will specify the cost to banks, and IKA, of the integration of pension funds. Before Evert’s intervention, Alogoskoufis had dismissed similar objections as «nonsense,» saying banks would make their own actuarial studies. Yesterday, he changed tack, saying these studies will be made by the ministry itself. After meeting with the Hellenic Banks’ Association, Alogoskoufis repeated that the legislation was «balanced» and had taken account of a wide variety of opinions. «There is no consensus view either among the banks or among the bank employees’ unions,» he said. The integration of the auxiliary funds is supposed to help certain banks get rid of excessive provisions that the deficits of some of these funds would impose on the banks. Until the adoption of International Financial Reporting Standards (IFRS) earlier this year made it mandatory for banks to include provisions for pensions and severance pay in their financial statements, they could, essentially, hide those expenses. From now on, they will appear as liabilities. Bank employees resent the fact that the integration of funds will result in lower contributions and, therefore, lower pensions. The government insists that older employees – those hired before 1993 – will not be affected.