The Slovenia Times

Pension Reform: Take Two



More Transparency in the Pension System

The new bill will be based on the pension reform proposal that was rejected in a 2011 referendum (and which Minister Vizjak's party opposed). The "issues that caused conflict with the social partners" will be excluded. As a first step, early retirement will be "severely limited", whereupon the retirement age will start rising. "We can no longer turn a blind eye to demographic trends...We have to change retirement conditions, especially early retirement." Vizjak did not go into the details of the proposed legislation but he suggested some solutions, which had been rejected in the referendum, will have to be even harsher. "Truth be told, the situation has deteriorated...We will probably not be in the clear with solutions that were proposed two years ago." The pension reform will also include supplementary pension insurance. "We want to promote supplementary insurance and make sure it is actually allocated for pensions. Early withdrawals (from pension accounts) run contrary to that notion,". In order to improve transparency, indicative individual pension accounts will be introduced so that everyone can check the balance of contributions. "This will also improve oversight," Vizjak said in reference to rampant non-payment of contributions by struggling companies.

Promotion of Permament Employment

One of the key goals of labour market reform will be to do away with the segmentation of the labour market, the government wishes to promote permanent employment by also imposing restrictions on fixed-term contracts. Minister Vizjak pointed out that the government would like to free employers of the burdens and red tape in both employing and dismissing workers. "Regarding dismissals, we want the issue to focus on the content, the reason why somebody will lose their job - prevent abuse and mobbing but at the same time make the procedure clear cut and such that an employer, with average education, will be able to manage it". The labour reform will also introduce temporary employment options for pensioners and the unemployed, which would be accessible exclusively through the Employment Service. These forms of employment would not be a variation of the mini jobs that voters rejected at last year's referendum. The amount of work that a person will be able to do will be significantly lower and the jobs will be forwarded by the Employment Service which has the best overview of the labour market and is also a public agency. The Employment Service will be able to spot possible abuse by employers, he added. Labour market reform is expected to be prepared by mid September when real negotiations with unions will start.

Unions want "Decent Pensions" of 72% Average Net Pay

As the coalition gears up to begin talks on pension reform, the ZSSS trade union confederation announced their central negotiating position will be for a "decent pension" of at least 72% of the average net wage for 40 years of employment. The target was last met in 2002 when pensions reached 72.8%, whereas in 2011, they reached only 63.4% of the net average wage, while the OECD average stands at 70%. The government has decided to speed up reform efforts after a series of downgrades and lack of progress in shoring up the banking system. But the unions warn that the pension and labour market reforms will not bring a meaningful improvement to Slovenia's ratings. According to Andrej Zorko of the ZSSS, the sustainability of the pension system depends on other systems such as the tax scheme. The government should first patch up its tax collection system, saying that problems with the pension purse began when employer contributions were reduced.
Union chief, Semolič, echoed this, saying "there will be no successful pension reform if work isn't done in other areas". He proposes an additional tax on financial institutions and higher employer contributions.


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