Greece to get occupational pensions

The occupational pension, derived from extra contributions made by employers and insurees and subject to an agreement made either on a sectoral or company basis, is emerging as the most important innovation of the budding insurance reform. The agreement will be ratified by a collective labor agreement and those involved will be able to choose their capital managers in the market. Reciprocal nature Occupational pensions will supplement other pensions from main and supplementary pension funds. They will be the only funds in which payouts will depend on contributions, and the management of reserve funds will observe the principles of a market-based system. Nevertheless, by all indications, the social security bill will confine itself to enacting supplementary occupational pensions in principle, and avoid deciding on the terms that will govern their actual operation. The government will defer the question of contribution amounts invested in occupational pension funds and the type of capitalization (individual or group) to future presidential decrees, in an attempt to secure the greatest possible consensus. At the same time, a new institutional framework to enable the establishment of private pension funds or mutual pension funds is in the pipeline. This will further require the creation of subsidiaries by private insurance companies and the transfer of large amounts of capital. The terms on which these firms would be set up were the subject of a meeting on Friday between Economy Minister Nikos Christodoulakis and representatives of the Association of Insurance Companies of Greece (EAEE) and the Federation of Greek Industries (SEV). The element of reform in the new social security bill seems to be confined to that one measure, since the government has no intention of risking creating an even worse political climate by making radical changes. However, capitalization of some supplementary pensions has recently showed promise. Of course, the decision to carry out moderate changes predates today’s political situation. But there are many who fear that even slight administrative changes will trigger off a broader upheaval. Proposals for dialogue In any case, provided that there are no drastic political developments, the Ministry of Labor will bring up the following scenarios for discussion. They will not immediately alter basic aspects of the current pension system which have already been agreed to by PASOK-affiliated unionists. The proposed retirement age will be 65, up from 58, through the provision of incentives in the form of higher pensions. – Parental leave (two to three years) may be taken into account in pension requirements for mothers with underage children. – Pensions will be set at 80 percent of income. – Only the legal structure for unification of the social security funds will be proposed. Their operational integration will be left till later. – The idea of seeking extra funding from an increase in VAT has been abandoned. But the minister of the economy will commit himself to providing a fixed percentage of the gross national product. – Amendments are already being drafted to assign capital managers, which will be compulsory for social security funds, to administer reserve funds. The security funds will have the responsibility for where reserve funds are invested. – The transition stage will be extended to 2008. – Pensions for new (post-1992) insurees) will be topped up to make them equal to those of «old» insurees.

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