Timely medicine for bank pension funds

In a bid to bail out Greek banks’ beleaguered social security and pension systems while providing a boost to state finances, bankers have proposed paying a massive 2 billion euros toward a new, single auxiliary pension fund for all their employees. The idea, advanced by Piraeus Bank Chairman Michalis Sallas, is designed to keep bankers, unions and government officials happy while staving off potential economic disaster triggered by social security and pension demands that are staring certain banks in the face. Under the International Accounting Standards (IAS) that are due to come into effect in Greece on January 1, certain banks’ auxiliary funds would no longer appear as financially viable, forcing the banks to close. Sallas’s proposal, which appears to enjoy government and union backing, calls for the state to inject another 2 billion – over a long period – into the new fund. As of January 1, the state Social Security Foundation (IKA) will become the main social security and pension fund for all bank employees.