This autumn could herald the creation of one of Greece’s largest supplementary pension funds with potential assets of e4bn – much of which is set to be pumped into the stock market, under plans to consolidate the retirement benefits of the country’s entire banking workers sector.
The amount also excludes billions of Euros to be channelled into first pillar social security arrangements by the umbrella scheme – named the Unified Fund of Bank Employees.
Dimitris Tsoukalas, vice president and international relations secretary of the Athens-based Greek Federation of Bank Employees, comments: “We want to produce a single fund for all bank employees, in a sector which at the moment is in pieces.
“There are six funds for the main pension contributions and more than fifteen funds for supplementary pensions. What we want to do is have one main supplementary pension fund and then put all the contributions from employers and employees into it.”
The first pillar system, he says, will involve a grouping arrangement of the banks in terms of their social security payments.
“Some do this already, but there are about five banking groups which do not – it depends on the year of establishment of the bank.”
The scheme will cover around 60,000 people bank employees.
Contributions to current funds operate on the basis of one part employee against two parts employer payments. Present rates for first pillar payments are 3.3% of worker salary against 6.6% from the employer – with discretionary supplementary pensions rates.
Tsoukalas says these are likely to converge in the new fund. However, investment issues have yet to be broached, he notes.
“We want to have co-management with the bankers here, but we have not reached this point yet. First we must get a political decision and then we will go to the technical points. The most serious of these will be how to manage the money. What we include in our proposal is that we don’t just want to have a rate of return of 2% over bank deposit interest rates – like insurance companies. Our proposal is to build up more money, so we are going to have to invest this.”
He expects a political decision in the autumn, although debate is still to be had over funding: “Half of the money is already there from the old supplementary pension funds – but we need more – the question is who is going to pay for this.
“The state should pay something because they have never paid for us and not only that they have also held a lot of the money we paid in contributions since the war.”