EU Commission Calls for Sustainable Pension System

Trade unions are meanwhile warning that even an announcement of a new reform could trigger a wave of new retirements.

Vice-President of the European Commission Valdis Dombrovskis, in charge of the euro and social dialogue, said, as he visited Ljubljana on Friday, that the reform should build on intergenerational solidarity.

Given the demographic changes, the issue needs to be addressed, he said. "The longer you delay with a solution, the harder it will get," he pointed out.

The effects of the 2012 pension system reform are positive and a bill creating a demographic fund is expected to be passed soon, the Commission said.

But the Commission believes additional reforms will be needed to ensure long-term sustainability of the system.

Dušan Semolič of the largest trade union association, the ZSSS, believes that the mere announcement of a reform may cause great damage. People know that every reform brings a stricter system, so they rush to retire as soon as they meet the basic conditions, he explained.

He believes intergenerational solidarity should remain the first pillar of the pension system. Many employees have wages too low to invest in the second pillar, he noted.

"No pension reform will be successful unless the young get jobs, unless the number of the unemployed is reduced and unless employers start offering jobs cut out for older people," he pointed out.

Semolič pointed out at a meeting with Dombrovskis that the state had double standards. While it expects those employed in the real sector to work longer than they need to, it wants public sector employees to retire as soon as they meet the basic conditions.

Many are bothered by the information that some EUR 1.5bn in budget funds flow into the pension purse every year, but they forget that until 1996 the pension purse received no money from the budget, he said.

On the contrary, the money from the pension purse was used for other budgetary purposes, as the contribution rate for both employers and employees was 15%, Semolič noted.

The share for employers was then reduced to 8% in 1996 and since then the state has to cover for the deficit. "Slovenia is the only country where employers pay smaller contribution than workers, which is not fair."

Efforts for an overhaul of the pension system are under way.

According to Labour Ministry State Secretary Peter Pogačar, a task force has started drafting a White Book on further reform of the pensions system that is to come into effect by 2020.

The White Book on pension reform was planned for 2015 in the coalition agreement.

Meanwhile, a debate on the bill creating a demographic fund is expected to start in the autumn.

This year the ministry plans to find a solution for greater flexibility between various statuses to enable pensioners to stay part time in the labour market, while next year it plans to broach the issue of disability insurance, which has not been tackled since the 1990s.

Source: The Slovenia Times