THE ROBERT Fico government is looking for money to fulfill the promises it made regarding social programs, and is considering reducing contributions to private pension accounts for this purpose.
According to the Pravda daily, the cabinet is expected to decide whether to increase the payroll taxes currently paid to social insurer Sociálna Poisiťovňa (SP) and to reduce the flow of money to private pension management companies.
People who joined the second pension pillar, and thus started saving money in private pension accounts, currently pay 9 percent of their wages to SP and another 9 percent to their private accounts. However, the state budget does not have the money to cover its obligations to these private accounts, and Fico refuses to cover the shortage by privatizing state assets.
According to the prime minister, the ratio of payments to SP and the private pension companies will have to be changed. "We see no other way but to cut payments to pension management companies," the PM said at an October 30 conference of the Klub 500 industrialists association.
"By 2010, when the money for pension reform from the privatization of the Slovak gas utility SPP runs out, we will have to find other ways [of financing the deficit]," said Peter Goliaš, an analyst with the INEKO think tank.
Goliaš said that reduced public spending was the ideal place to find additional funds. Another possibility is that the state could start borrowing money to cover the pension reform by issuing bonds.
According to Jozef Paška, the head of the Allianz-Slovenská private pension firm, politics should be taken out of the issue, and people who opted to begin saving in private accounts should not now be penalized simply because a socialist government is in power.
"We will support solutions in which the current value of payments remains unchanged, because the people who joined the reform agreed with it," he said.
6. Nov 2006 at 0:00 | From press reports