The issue of welfare funds was discussed for the first time at the Labor Advisory Council (LAC), which met on Thursday. In remarks following the meeting, the Minister of Labor and Social Insurance, Marinos Mousiouttas, stated that employers and employees have different approaches to certain issues, noting that the government will clarify its position on several matters at the next meeting, on November 9.
According to Mr. Mousiouttas, the unions are calling for the mandatory implementation of provident funds, while employers argue that participation should be voluntary. There is also disagreement regarding existing welfare funds, as the unions are asking to be exempted from the formula that will apply to the new funds—a proposal with which employers disagree.
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“We have received the views of nearly all stakeholders; and we are awaiting the OEB’s views by next Tuesday, so that as a Ministry we can categorize the various proposals and see where there is agreement and where there are differences,” the Minister stated at the outset.
He noted that the Government’s general position is that “provident funds are a necessary institution that supplements workers’ pensions. What we will try to do is see how this institution can be expanded.”
As he explained, the expansion could involve either voluntary or mandatory participation in the system.
“So we are called upon to find the middle ground between the two different views held by the partners. The unions are clearly in favor of a mandatory system, while employers are in favor of a voluntary one,” he noted.
The minister also mentioned that a proposal had been submitted for labor unions and employer organizations to participate as shareholders on the boards of the welfare funds.
He clarified, however, that representatives of the various organizations would not be able to participate in the supervisory authority.
He noted, however, that the proposal to create an advisory body—which would be kept informed and able to advise the supervisory authority of the welfare funds—is being viewed favorably.
The Minister also addressed the more specific issues discussed, such as the level of benefits and whether they will be graduated or not, as well as the method of payment upon retirement—either as a lump sum or in monthly installments added to pensions.
The possibility of maintaining the option to borrow from the provident funds for specific reasons, as is currently the case, was also discussed.
Mr. Mousiouttas made it clear that the profitability of the welfare funds “is not something that will happen tomorrow, the day after tomorrow, or next year.”
He emphasized that “for a welfare fund to mature and generate returns, it takes at least a decade; however, the foundations, the legal framework, the agreement between the government and its partners on how these pension funds will operate in the future, and then the drafting of the legislative framework will begin immediately.”
“We will certainly follow European standards, because the issue of welfare funds is currently being discussed at the European level as well,” he said.
“So what we intend to do is, at the next session, clarify several— if not all, of the government’s positions regarding pension funds, so that the dialogue can continue smoothly. As you can see, we’re talking about completely different philosophies on certain points,” he added.
“I believe that, in parallel with the debate in the House of Representatives on pillars 0 and 1, that is, the bill expected to go before the Cabinet soon and subsequently to the House, we will discuss the welfare funds in order to prepare the framework for an agreement,” the Minister stated.
When asked about the government’s position regarding the mandatory nature of welfare funds, the Minister replied, “I said that our position is that we favor the expansion of welfare funds. This is the issue we are working on, now that we have everyone’s views before us, and in the very near future we will state our position regarding whether pension funds should be mandatory or not or some middle ground.”
“We will try to find the middle ground so that neither side feels we’ve sold them out. Our goal is, through discussion, dialogue, and persuasion, to achieve a solution where neither side feels like a winner, but neither feels like a loser,” he added.
When asked when the bill on pillars 0 and 1 of the pension reform is expected to go before the Cabinet, Mr. Mousiouttas noted that the legislative review is still pending. As he explained, once this is completed, the relevant agencies will send the bill to the Attorney General for signature.
“As soon as we have the Attorney General’s signature, we will be ready to go before the Council of Ministers for discussion and approval of the proposal, and it will be sent immediately to the House of Representatives,” he noted.
Source: CNA
