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Cabinet decides to reopen second pension pillar

THE SECOND, capitalisation, pillar of Slovakia’s pension system is to be reopened again. At its regular session on October 1, the Slovak Cabinet approved a plan to reopen the pillar for seven and a half months. People will be given the opportunity to join or to quit the second pension pillar, which is administered by private pension fund management companies, and return to the first pillar, the 'pay-as-you-go' scheme run by the social security provider Sociálna Poisťovňa, from November 15 until June 30, 2009, the SITA newswire wrote.

THE SECOND, capitalisation, pillar of Slovakia’s pension system is to be reopened again. At its regular session on October 1, the Slovak Cabinet approved a plan to reopen the pillar for seven and a half months. People will be given the opportunity to join or to quit the second pension pillar, which is administered by private pension fund management companies, and return to the first pillar, the 'pay-as-you-go' scheme run by the social security provider Sociálna Poisťovňa, from November 15 until June 30, 2009, the SITA newswire wrote.

Parliament will deal with the draft amendment to the law on old-age pension saving to allow for the opening of the second pillar through a shortened legislative proceeding.

Former labour minister Iveta Radičová on October 1 proposed that the second pillar be opened permanently, the Hospodárske Noviny financial daily wrote. According to her, incessant opening of the pillar (it was also opened for the first six months of 2008) in spite of affirmations that it would not be re-opened, makes citizens uncertain.

Pension fund management companies agree with this proposal.

“Repeated opening and closing of the second pillar is neither systematic nor effective,” Peter Socha, head of the Association of Pension Fund Management Companies, told the daily. “In this case we would rather choose the lesser evil.”

As a result of the new move the government expects an inflow to Sociálna Poisťovňa's budget based on the assumption that between 30,000 and 150,000 policyholders will quit the second pension pillar by late June 2009. On the other hand, it estimates that 5,000 to 20,000 people may use the option to join the second pillar.

The cabinet first announced its intention to reopen the second pension pillar after an extraordinary session on September 20. Prime Minister Robert Fico stated that Slovakia enjoys no immunity against the impact of the worldwide financial crisis. The cabinet session concluded that savings in the second pension pillar are most endangered by the current situation on world financial markets.

During its earlier re-opening in the first half of this year, 103,500 policyholders left the second pension pillar and 21,200 people joined it.

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