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Few Slovaks move to opt out

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  • Few Slovaks move to opt out

SLOVAKIA - Just 6% of Slovakians had chosen to leave the second pillar pension system by the end of the recently implemented 'opt-out' deadline, figures reveal, but new member inflow will be slower from now on as it is no longer mandatory.

Approximately 100,000 people have seized the opportunity created by prime minister Robert Fico to withdraw their money from second pillar pension funds in the first six months of this year.

During that same period, the system was once again opened for older workers who had not opted-in when the second pillar system was first set up in 2005.

However, Fico's measure has "hardly had any impact on the system at all," noted Jiri Rusnok from ING Czech Republic and Slovakia, as the 100,000 leavers was offset by just 30,000 new voluntary joiners.

"Leaving the second-pillar was less of a popular issue than Fico thought, as he had expected 10% or even 15% to opt-out," Rusnok explained.

Rusnok is convinced Fico will now leave the topic to focus more on the introduction of the euro and other policies.

"But what will happen when Fico wins the next election is another story - I think he will try again to pull money from the pension funds," he suggested.

One change to the system will have a far larger impact as the Slovak second pillar is no longer mandatory even for new entrants to the labour market.

"The inflow of new members to the funds will be slowed down," said Rusnok.

That said, he estimates most young people will nevertheless opt to join an supplementary pension fund.

"They will see the uncertainty of the state pension system in the long run," Rusnok pointed out.

He also said many people believe the money in the second pillar is their own money and they more or less know how much they will get in the end.

In other news, ING has appointed a separate pensions director for Slovakia, allowing Rusnok to focus on his position in the Czech Republic only.

Viktor Kouril has taken up the mantle of pension director for ING in Slovakia, based in Bratislava.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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