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Contentious social insurance amendment passes to second reading

The Social Insurance Act proceeded to a second reading in parliament on September 24 with 84 votes in favour, 60 against and one abstention. The ĽS-HZDS MPs, who were originally against the pension amendment, also supported it. However, ĽS-HZDS Chairman Vladimír Mečiar conditioned that support on several modifications that cleared up ambiguities in the proposed system.

The Governing Coalition's Social Insurance Act amendment calls for the second pillar to be opened in the first half of 2008. This will allow people to leave or enter it freely, whereas participation had been mandatory upon entering the workforce. It also extends (from ten to 15 years) the period for which people have to work and make payments toward their retirement in order to be eligible for a pension.

The amendment also prohibits people who are collecting an early pension from working. The basic level of assessment for calculating the level of deductions is proposed to be increased from threefold to fourfold the average salary, meaning the social security provider Sociálna Poisťovňa will be taking in more money to make up for its cumulative deficit of some Sk27 billion.

According to the proposal, everyone whose insurance payments are paid for by the state should qualify for the second pillar, if they want to. [As opposed to the original proposal according to which women on maternity leave or people on disability allowances, for example, wouldn't be able to enter the second pillar. - ed. note]

There were 122 comments submitted – from several ministries and the Slovak National Bank – before the amendment was even sent to parliament. The opposition parties, which established the second pillar during the previous government, are highly critical of the amendment. Private Pension Savings companies (DSSes) hold the accounts of more than 1.5 million people.

"The result of this agreement is that the amendment has now been cut down to a fragment (of what it was)," former PM and current SDKÚ-DS leader Mikuláš Dzurinda said at press conference on September 24. According to Dzurinda, Mečiar lifted most of the conditions his party demanded in exchange for supporting the amendment from the opposition.

Dzurinda says the changes to Social Insurance Act being requested by Mečiar – especially the temporary decrease of contributions to the second pillar from 9 to 6 percent – stress the importance of a petition for the protection of the second pillar. The petition was initiated by the SDKÚ-DS party. According to him, the petition text is already drafted but must now be discussed within the opposition partners. The petition should soon be presented to the public. TASR

Compiled by Zuzana Vilikovská from press reports
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