"The bill on Social Security is one thing, and the bill that will be drafted for the Provident Funds is another," said the Minister of Labor and Social Security, Marinos Mousiouttas, on Monday following the meeting of the Labor Advisory Council on pension reform.
When asked about the cost to the state if the reform is implemented as is, the Minister referred to the Ministry of Finance’s tables and pointed out that “The total additional cost is estimated at 486 million over the six-year period for the state and 334 million for the Social Security Fund, so approximately 820 million over a six-year period.”
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He reiterated that the bill on pension reform is expected to be submitted to Parliament by the end of September.
In his remarks, the Minister clarified that there will be another bill regarding the Provident Funds, which the technical committee will discuss, while noting that the first phase covers the zero pillar and the first pillar. “One bill concerns Social Security, and another will be drafted for the Provident Funds,” he noted.
He also mentioned that at today’s meeting of the Labor Advisory Council, the social partners requested clarification regarding the cost estimates provided by the Ministry of Finance last week and noted that “we answered the questions we were able to answer,” adding that the rest would be addressed by the Ministry of Finance.
Mr. Mousiouttas said that “I expected there to be proposals today regarding the various sub-areas of the reform, but the social partners have stated that in order to make proposals, the article-by-article discussion of the bill, which began last Friday at the Social Insurance Council, and therefore this discussion will continue over the next three days, on a daily basis, so that it can be completed and, on Monday, at the next session of the Labor Advisory Council, anyone who wishes to do so may come forward with comments on the proposal.”
He made it clear that “regardless of whether the figures are disputed or not, this is the government’s proposal; this is what the state and the Social Security Fund can provide; and therefore, taking this total cost into account, if they have any suggestions for changes to any aspect, they should submit them to us.”
He added that, “provided they are briefed over the next three days and the article-by-article debate is completed, they should logically be able to provide us with their suggestions on Monday.”
He also noted that the Technical Committee will meet tomorrow to discuss the second pillar. ““I’ve asked everyone to expedite their meetings so that, when we appear before Parliament very soon, we’ll be able to reach a conclusion on the second pillar as well,”he noted.
He said that the Ministry is ready for the second pillar, “provided that we first hear the positions of our partners and how they view the issue—not only regarding the overarching question of whether it should be mandatory or voluntary, but also on the specific issues concerning the second pillar.”
Responding to criticisms that the reform is incomplete because it concerns only the first pillar, he said that “we are not just talking about the first pillar; we are talking about the first pillar, the zero pillar, and the second pillar.”
He noted that “the sooner there is a response—and I am certain there will be a response—the sooner this sector can be finalized as well.”
He also mentioned that the bill will be submitted to the House of Representatives by the end of September so that deliberations can begin in the relevant committees.
Responding to a question, he stated that “for us, an agreement on the second pillar is not a prerequisite for moving forward with the first pillar,” and added that the Ministry’s position is to expedite the meetings on the second pillar so that an agreement can be reached as soon as possible.
“Nothing has changed from what we had said previously,” he added.
When asked about the employers’ long-standing position that its implementation should be the result of free collective bargaining and through collective agreements, the Minister clarified that “the Provident Fund will be established by law,” adding that the Provident Fund will be the entire structure created to implement the Provident Funds and that a single paragraph may specify whether participation is mandatory or not.
He explained that the legislative process for the Provident Funds is not starting now but will begin soon. “Actuaries from the ILO are already on their way, along with an advisor from the Ministry of Finance, so that we can begin this process,” he said.
He also said that the legislation for Pillars Zero and One will be submitted to Parliament. “The partners’ position is that there must be an agreement on the second pillar at the same time or soon afterward; based on that agreement, legislation will be drafted that will cover everything from A to Z regarding how the pension funds,” he said.
He noted that the disagreement stems from the fact that “we do not make it a precondition that, in order for Pillar 0 and Pillar 1—the legislation—to move forward, there must simultaneously be an agreement on the second pillar.”
When asked whether the government would mandate pension funds, the minister said: “Allow us to have our own strategy,” noting that he would not publicly disclose his proposals and that he was first awaiting the positions of the coalition partners.
In response to a comment that labor unions have requested data on the pensions retirees would receive if the reform were not implemented in the coming years, the Minister replied “Whatever is requested and we are able to provide, we provide.”
Commenting on the fact that, following the last meeting, the social partners stated they were not satisfied with the explanations provided and are calling for a redistribution of resources, he said that “if I fix the Social Security Fund but ruin the economy, you understand that the consequence will be that the Social Security Fund will also have a problem.”
He emphasized that “we’re not talking about a redistribution; which is why we’re saying overall that one part will be funded by the Social Security Fund and another part by the public budget without upsetting the balance.”
When asked about raising the retirement age, the Minister said that “our positions have been on record for some time now. We have referred to a potential increase in contributions, if necessary, so that there is no need for either a reduction in pensions or an increase in the retirement age. “Our position is clear, and we reiterate it.”
He added that a study on life expectancy is conducted every five years, and if and when it shows that the retirement age should be raised, then an increase is discussed, but this is independent of pension reform.
“Just as there is an agreement to increase contributions sixfold—from 9 or 13 to 39—which was agreed upon by everyone and was implemented, and thankfully it was, but at the time, no one raised the issue that a sixfold increase might put future generations at risk,” he said.
When asked what answers the partners had requested from the Ministry of Finance, the Minister noted that each time something additional is requested and that they want more analysis. “I’ll see if the relevant official from the Ministry of Finance can come to provide the explanations they’re asking for,” he said.
He also said that all the data they requested has been provided and that, if they want anything additional, they will contact the Ministry of Finance to provide further details, if necessary.
Referring to the amount of funding for the reform, Mr. Mousiouttas noted that the government had submitted a proposal, which took into account suggestions made from time to time by all social partners and resulted in a structured, comprehensive reform.
“The reform is not just about how much pensions will increase, or how much the low-pensioner allowance will increase; it also concerns the fact that there are segments of the population for whom we determined that the state should step in to assist and contribute, on their behalf, social security, such as mothers caring for children, informal caregivers, college students, high school students, and people with disabilities, thereby demonstrating a social commitment,” he said.
He also noted that there are variations regarding unemployment benefits, “there is a mitigation of the 12% cut, and when we add all of this up, we arrive at the figures we determined the fund and the state can provide while maintaining its sustainability.”
He also noted that there is a long-standing demand from partners and society that the Fund’s money be returned to the Fund, and that this intention is included in the reform, for the gradual return of the funds to an independent fund to be established in accordance with European standards, and also, once borrowing ceases, surpluses will be deposited into this fund.
“Surpluses and loan repayment installments will be channeled into a fund to be established over the next 2–3 years, and from which the fund’s investment policy will begin, generating revenue—calculated using actuarial methods—that will enrich the Social Security Fund,” he said.
He added that the disagreement with some of the partners concerns whether the state’s cost of implementing the repatriation policy should be included within the framework of the pension reform.
“We have a different view: that these are costs that must be taken into account, because the state, once it is deprived of the 800 million—depending on whether the discussion takes place this year or next— that social security surplus and will have to go out to the markets to borrow those 800 million, there will be a cost. The fact that it will repay me the 800 million and make certain installment payments will entail a certain cost. So these costs are factored into the total cost of the reform.”
He added that there are social partners who see it differently, on the grounds that “one thing is one thing, another is another. It’s purely a matter of philosophy,” he said.
When asked whether the amount listed in the provided data would change, he stated that “if there is any slight room for changes, or if they point out something that could be adjusted without substantially altering the costs, we are open to hearing it.”
He said that the bill will be submitted to the House of Representatives by the end of September and explained that because October 1—which is a Thursday and the scheduled submission date—is a holiday, formally, unless the House holds a special session to allow for the submission, it will be postponed to October 8. He added that the next meeting of the relevant committee—if it is the Labor Committee—is on October 13.
He noted that this does not mean that discussion of the bill cannot continue even after it has been submitted, explaining that if there is agreement on a point, the proposal submitted to the House of Representatives can be amended without being referred back to the Cabinet.
Source: CNA
