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Slovakia’s Labour Minister says second pension pillar is not helpful to most people

The second pension pillar could be worthwhile for only 15 percent of the 1.4 million currently-enrolled participants, said the Minister of Labour, Social Affairs and Family, Viera Tomanová, adding at the October 26 session of the Economic and Social Council of the Slovak Republic, that the second pillar is not about saving but about investing, which has brought losses to all participants thus far, the SITA newswire wrote.

The second pension pillar could be worthwhile for only 15 percent of the 1.4 million currently-enrolled participants, said the Minister of Labour, Social Affairs and Family, Viera Tomanová, adding at the October 26 session of the Economic and Social Council of the Slovak Republic, that the second pillar is not about saving but about investing, which has brought losses to all participants thus far, the SITA newswire wrote.

She asked that people not be misled through arguments related to demographic changes because no demographic development could be resolved by a pension system. The minister told SITA that pro-social and family supportive measures, as adopted by her government, will provide a solution to future demographic developments.

In her opinion, the measures introduced by the incumbent government have had a positive influence on the growth of birth rate in the Slovak Republic. She said that at the time the current cabinet came into office in 2006, the annual population growth was only 500 people and that it was over 3,000 in 2008 and even more in 2009.

The Director General of Sociálna Poisťovňa, Slovakia’s social security provider, told last week's session of the parliamentary committee for social affairs that the second pillar was advantageous only for 63,000 persons when considering those younger than age 30 and their income. This figure represents less than five percent of the current number of participants in the second capitalisation pillar.

From the middle of November 2008 to late June 2009, about 65,000 participants opted out of the second pension pillar and 14,000 people joined it. People were allowed to leave or enter the capitalisation pillar until June 30, 2009. The Labour Ministry had projected that 30,000 to 150,000 savers would leave the second pillar during that period and that there would be from 5,000 to 20,000 new participants. SITA

Compiled by Zuzana Vilikovská from press reports
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