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Portugal eyes state firms’ pension funds

PORTUGAL - The government could get hold of assets and liabilities of three funded pension funds of state-owned companies in a bid to keep the public deficit within EU limits.

The 2.5 billion-euro pension fund for the workers of the state owned Caixa Geral de Depósitos (CGD) as well as the airport workers’ ANA and NAV could be incorporated into state pay-as-you-go system, according to local press reports.

The move would be to control the deficit within the threshold of three percent of gross domestic product stipulated by the Stability and Growth Pact.

The Portuguese press reckons that if the schemes were brought under one roof, the state would get back a sum worth 1.2% of GDP. The funds would go to Caixa Geral de Aposentações (CGA), the institution paying pensions to public employees, according to the financial press.

A spokeswoman for the ministry of finance told IPE she could not comment on the matter presently but confirmed the government had approached the European Union on the question and “works” were going on.

Last year the Portuguese government took over the under-funded postal pension fund, a consultant who declined to be named told IPE. That move was aimed at clearing the balance sheet to make it attractive for privatisation.

If the government went ahead, it should not be seen as a case of a “doctrinal or philosophical change”, explained Leonardo Mathias, director general at Schroders in Portugal.

Mathias said the move would not bring forth a shift from the funded to the PAYG system, it would rather be a case of the government trying to take over assets in order to help public accounts.

He added there were some outstanding legal issues which could prove problematic, as workers of the state-owned CGD have paid up to 11% to support the fund and have a legal right to it.

CGD, in the meantime, said it has received no news from the government. An official told IPE the fund had received a preliminary letter from the government a few months ago, saying a takeover was being considered but no further communication had occurred since.

CGD’s pension fund is managed by a team of investment experts of the bank.

ANA and NAV were not available for comment.

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