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No exodus from second pillar yet

THE OPENING of the second, capitalisation pillar of the old-age pension scheme on January 1 has not yet led to a massive outflow of its clients.

THE OPENING of the second, capitalisation pillar of the old-age pension scheme on January 1 has not yet led to a massive outflow of its clients.

During the first 11 days of the year, 582 people stopped saving in personal accounts administered by pension fund management companies and put all their old-age insurance premiums back in the first, pay-as-you-go pillar, said Ivan Bernátek, the director general of social security provider Sociálna Poisťovňa.

The new law opened up the capitalisation pillar of the pension system for six months, allowing more than 1.5 million people who have been saving for their pensions in private accounts to quit from now until June.

Bernátek told the public Slovak Radio on January 12 that the second pillar is disadvantageous for nearly one million people.„There is an awful lot of people who we will severely traumatise after they retire,“ he said. „There is a huge danger that they will not save enough money.“

Only 350,000 to 400,000 people with upper-level incomes will benefit from the second pillar, Bernátek said.

The vice-chairman of the Association of Pension Fund Management Companies, Viktor Kouřil, disputed Bernátek’s claims. He said the second pillar will generate higher pensions, except for savers who cannot save enough money because the minimum saving period for pension eligibility was extended from 10 to 15 years.

Sociálna Poisťovňa faces a growing deficit. Prime Minister Robert Fico’s cabinet blames the former cabinet of Mikuláš Dzurinda, saying the second pillar – which was introduced to cope with negative demographic trends in Slovakia – led to a Sk26-billion (Ř775.7 million) deficit for Sociálna Poisťovňa.

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