Vladimír Urbánek (Kurzy.cz)
Markets  |  November 30, 2012 14:06:09

Forum Golden Crown - to address pension reform voiced praise and rejection

On Thursday, met in Prague Golden Crown Forum dedicated to approved pension reform, which will run from January 2013. Among the participants were not missing state representatives, headed by the chairman of the Senate Milan Stech and Prime Minister Petr Necas. The forum was also attended by the new Minister of Labour and Social Affairs Ludmila Müller.


In his opening remarks, the Chairman of the Senate Milan Stech devoted risks chosen system of pension reform. He recalled that the Senate reform vetoed. Concerns over Lords reform also because of the absence of political consensus and has support from many experts. The introduction of the second Pillar under Štěch significantly worsen ongoing pension system, the source of funding reform of the VAT is not realistic, bear the cost of the reform pensioners will be worse because indexation of pensions. The second pillars also guarantee revenue. The only one not lose, under Štěch pension funds that do not have any guarantees. If there is no value for money, people will seek compensation from the state. This applies primarily to self-employed. In his speech also stressed that we are not sufficiently reflect a negative experience from abroad.  Shows, for example, that the yields are dependent on economic prosperity.   Already the continuous interruptions account around 40 billion crowns. The second Pillar under Štěch will in the future need to reduce the state contribution from 3% to 2%. According to the Chairman of the Chamber negative demographic projections ignore such influx of immigrants. Also recommended to strengthen the fight against the black economy.


Prime Minister Petr Necas warned that the pension reform is still a lot of talk without something happening. Social democracy according to him, did not introduce any reform. An alternative to this reform is the only anti-reform. But now we have to respond to demographic change. Reduces the number of people economically active compared to pensioners. In 2050, 1.2 will seem working for every pensioner. Situation a few years ago was different - it was a greater degree of employment and rising wages. The worsening situation suffers continuous pillar. Negative factor is also high counting spare time. For us it is also one of the greatest dependence on the state, 95% of retirement income provided by the state. Pension scheme is a good system, Prime Minister, in terms of security for old age but plays a crucial role. Represents a complementary system.Introduction of a funded system is correct. It is also breaking the psychological barrier when the 30 to 40 years, nobody alone at delaying the retirement money. We come up with a breakthrough moment when he first will have every opportunity to actually save for retirement. The annual pulling 6 billion from the continuous system is not a disruption of the state system and its privatization. It's about diversifying risk. Have a wide spectrum of possibilities. Some of the high dependence on the state like ODS wants to give people freedom. Without reform is to increase social security contributions.   With the reform of long-term saving of up to 80 billion a year, will develop the capital market and the overall development of the economy. As regards the advantage, not by Necas true that the second pillar is effective only for the rich. With a length of financial savings benefit increases.


Deputy Finance Minister Radek Urban presented at the forum fiscal impact of pension reform.   Differences in income and pension expenditure should be offset in a short time. Spoke of guarantees, which provides savings. It is not correct to speak of the privatization of the pension system, the client saves money and it's resources.


Newly appointed Minister of Labour and Social Affairs Ludmila Müller said that without state intervention pension system can not provide citizens with security in old age. 25 most developed countries gave pensions to 4% in 1990, now it is one of many. I. pillar dramatically increases the government deficit. On the market there are many options to increase the value of money, but they are usually more expensive than 2 pillar. No reform can not be ideal, it is the intersection of political views. Pension reform is an important milestone and a first step.


CSSD shadow finance minister Jan Mladek said that the Czech Republic is rough consensus on the functioning First and Third pillars of the reform. Compliance is the second part called pillar. According Mladek second will be the next government canceled and pillar pension reform started in times of crisis is a crime. The example of Slovakia said, we see that fared worst, people who went to the growth pillar. Although disagrees with the Hungarian Prime Minister, made ??by Mladek brilliant thing.Neznárodnil funds, only people with money to others.


Milan Šimáček, Deputy General Director of EGAP asked how social democracy is to reform the pension system. According to Milan Štěch we mainly had to do in order premium payments and growth, further develop the scheme and support the establishment of employee funds. It would be bad if you ruin the funds, pension taxpayer had to pay twice.


Vit Samek, CMKOS chairman of the Legislative Council, pointed out that people do not have the revenue to that in the new pension funds to save more. The priority should be to keep the first pillar, which people are able to give pensions. Additional pillars are of importance only in the form of third pillar that should get more space. Again mentioned support enterprise funds.


Machanec Thomas, director of social insurance MLSA, warned that if the pension system states are not interested in all countries, costs are rising dramatically. Felt especially European countries in crisis. Therefore it is necessary for us to promote reform.


Former Prime Minister Milos Zeman mentioned the reforms that took place during his reign. We managed to achieve reform of public administration, banking system, support for foreign investment, etc.There has been extensive privatization, which could be earmarked for pension reform. According to him, the consensus on reforms is possible, if the consensus of political elites. Where there are elite, which is the case here, no consensus can not occur. "I believe," he said further, "that exists on our stage right and left, and these two groups are different priority values." Instead of class struggle under Zeman is a need to realize that these values ??must be connected, otherwise it will lead to further social shocks. It should reappear empathy for these values ??and would like to restore these relationships.


Economist Ludek Niedermayer said that each search system brings risk. Good reform should shift the behavior of social groups.   Now none of us knows what will happen to us in the future and what will happen. Each pillar reform carries risk. A major factor is the development of the economy, especially the demographic system and the proportion of workers. The system should be robust in the first pillar. It is not good when the system is fully controlled by the policy. It should be driven by long-term and competently. A major problem is the question of funded schemes yields. Regulation is necessary to form so that the system had problems in the future. The pillars Second and Third problems is more. For the system to be stable it is well set. Social consensus expectations chain, is substantial. In extreme conditions, nothing will not work.


Tomáš Holub, Director, Monetary and Statistics of the Czech National Bank, spoke about the macroeconomic impact of the reforms. There is an increase in the cost of the pension systems. By 2060, the cost increases by the European Commission about 3%. As for revenue shortfalls from the state system when introducing the second pillars will depend on how many people and how social groups are involved in the reform. Attendance will be interesting for the higher income groups.Reform contrast solve low savings rate of low-income groups, which remain dependent on continuous system. The persistence of negative news is the absence of social consensus and precedent negative reaction to reforms in neighboring countries. Psychology will play an important role in people's decisions, the Czech public is cautious and conservative.


Edward   Palmer, a professor from the Swedish Uppsala University, participated in the Forum "virtually". He stressed that the experience with pension reforms in Hungary and the Slovak Republic were not nearly as bad as they look at first glance. According to him, the reforms were well-defined and implemented, although perhaps too reliant on FDC (merit system) folder. The main problem, however, was the lack of reserves, which the government has on its promises. Subsequent removal of reforms called the worst possible way. With regard to the lack of local knowledge gave the Czech Republic "only" universal recommendations. The government says it is to establish a good strategy to ensure its financing and continuity for the future. If you fulfill this, it does not matter if the second run pillar in crisis or boom.Reform is a long process, and fluctuations in the economy as well avoid.


Joseph Burian, State Secretary of the Slovak Ministry of Labour, Social Affairs and Family, pointed out that if there is no political consensus, these reforms will not work. Transaction costs are high and it is not worth Slovak. Political consensus is therefore crucial. The key to the pension reform is the second pillar. It consists of a first pillar. If you continue to borrow and you have a deficit, 2 sustainability pillar pension system fails. Slovakia does not have a condition that could have a second generous Pillar afford.Therefore, to reduce the percentage of money from the state vyvedených pillars from 9% to 6%. The problem is the Slovak low rate of return of funds, which is 1.2%. If the state borrows to 3%, and the loss is great. The Slovak want to achieve long-term agreement to keep the parameters did not change and agreed to the setting that will be accepted for many years. Devil's hoof is not reform in principle, but it is hidden in the details. This is a lesson from the reform of the Slovak Republic to other countries for us. The key for the Slovak experience shall immediately begin educating the public. Mr. Burian would we wish we did not get into major problems as they do.


Rusnok George, former president of the Association of Pension Funds and one co-author of the pension reform, approached some experience with pension systems abroad. Everywhere there are similar elements that combine state insurance with individual saving for retirement. The basis of the reforms is to determine the retirement age, where we are among the countries with an average age of retirement in many countries this age but already much higher. With regard to the integrity and sustainability of pension systems, to the tip of one of the Scandinavian countries worldwide.   Eg. The Dutch system also has three pillars, but instead our second pillar, the occupational funds, which are involved in 90% of the workers. We go the right way, but the technical implementation is not good. That funds ING to 2 enters pillars, is a business decision and stems from the lack of interest of the population access to savings and fears that the new government a key point of the reform, private savings, canceled.


Michal Straka from the company IPSOS introduced to home afternoon hearing the results of an exclusive survey of Golden Crown. Details are in the previous press release Golden Crown.


Machanec Thomas, Director of the MLSA, talked about how, for whom the pension reform pays off.   In this connection attention to pension calculator that placed on its website the Ministry of Labour and Social Affairs. He said, what are the parameters retirement calculator is based on and what data taken into account.Calculations are based on current wage and do not take into account inflation. The median income for about 22 years is recommended input around 45 years. With income up to 25,000 men should come to 50 years.   For women to be as long savings less advantageous. With increasing age, declining profitability, better will be the second pillar for people with higher and above-average incomes. With this is somewhat contrary to the finding that the second pillar is preferred for 50% of the population.


George Satava Economics Institute of CERGE-EI said that any reform represents a loss of one to two years' remuneration. Instead of 28%, which everyone now transferred to the first pillars, we outlet for savings second pillars will increase by 2% to our 30%. According to the wage and age it pays to enter the second pillars and rich people rather at an earlier age. Access is also rewarding young women, after 50 years, the analog input is already poor. Second pillar is thus more beneficial for men than for women. Petr Jansky, a researcher at the Institute of Economic Studies, Charles University, in his study of the new system compared with conventional savings - pensions. The judge, what kind of people are involved in the pension scheme of which he tried to deduce that people could become more involved in saving the 2nd pillar because some of them would like to save more and pension does not allow them.


Karel Svoboda, President of the Association of Pension Funds said that as a retired Czechs spend an average of 18 years and that our pension system is the most solidarity among OECD countries. Although the system adjust for many years, its level will decrease. Due to the reform for the first time in history, people have to decide on where to put part of the funds that would otherwise be done by state taxes. In thirty years of savings in the 2nd pillars can provide up to a quarter of board.Most people would not be willing to take the risk of investing itself, but in the pension fund is currently acceptable for most of them.


Jiri Sindelar from the Union financial intermediation and advice expressed fears of a purposeful behavior of financial advisers and intermediaries in offering retirement savings. Peter Safranek of AFIZ reminded that most advisors will be treated conservatively for sale, demand special qualifications Advisors deems proper.

Labour and Social Affairs Ludmila Müller in an interview with Radek Urban, Deputy Minister of Finance


Jirina Michálková  


General partner:   CSOB Pension Fund Stability

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