Slovenia is among the EU member states where public finances, especially spending on pensions and healthcare, are expected to be hit hardest by the ageing population.

With the current ratio between the active working population and pensioners standing at about 1.5 and expected to only decline further, a demographic fund as a measure meant to alleviate this pressure had been announced by several governments in the past.

Around 80% of the pension insurance contributions are currently coming from workers and employers, while the lion's share of the rest is covered by the state budget - the preset contribution is around EUR 1 billion a year or around 10% of the entire budget expenditure.

The new fund, as envisaged by the Janez Janša government, which is expected to discuss it soon, will take over the assets currently held by Slovenian Sovereign Holding (SSH), the bad bank, the para-state DSU and KAD funds, the pension insurer Modra Zavarovalnica and the stake in insurer Zavarovalnica Triglav currently held by public pension insurer ZPIZ.

The assets to be managed by the Demographic Fund are currently valued at EUR 8.5 billion and according to current plans, 40% of dividends and 60% of proceeds from the sale of stock would be retained so that the assets under management grow in the long term. 40% of the dividends would finance public pensions, while the rest would go towards financing family policies and construction of nursing homes.

It is SSH that controls the bulk of state assets at present, the total value of its investments in over 50 companies estimated at EUR 10.3 billion. These also include the national motorway company DARS, which is not meant to be transferred to the Demographic Fund.

SSH, 38.8% of whose portfolio consists of companies in the transport sector, 31.4% in energy, 21% in finance, and 8.8% in tourism and the economy, had a 6.8% estimated return on investment in 2019.

The figures suggest a major part of the burden for the shortfall in the pension system might thus remain on the state budget after the introduction of the Demographic Fund, a point that was echoed for the STA by Dušan Mramor, an economics professor and former finance minister.

Saying the model as planned by the coalition proposal is not viable economically, Mramor said that in the current circumstances the state has neither the funds nor the sources to finance what is planned.

"When you have an external net debt, it needs to be serviced and the funds available through the management of state assets are there to pay for this debt and for ongoing liabilities stemming from interest," he said.

Mramor feels the idea for this sort of fund is coming about 25 years too late. It would have made sense immediately after Slovenia became independent, with the country being a net creditor then and actually still having assets that could be used to finance the pension system.

He added that as an economist he could hardly comment on "political PR", which is why he preferred not to talk about the political dimensions of the coalition proposal.

In the proposal, Mramor also sees attempts to change corporate governance as regards state assets. Change is necessary, he however fears the proposals are unsuitable, especially given the planned make-up of oversight and management bodies, which he says gives political parties direct access to governance.

"This is completely inappropriate, as it is professionals who should be tasked with this," Mramor asserted.