SLOVAKIA - Individuals who decide to opt out of the Slovak mandatory second pillar pension system will not be able to turn their savings into cash after all, IPE has learnt.

Instead, the government has changed its proposals sopeople who opt out can only transfer their savings back to the unfunded pension system, the Ministry of Labour, Social Affairs and Family told IPE today.

The Ministry proposed large scale adjustments to the country's pension system, including a six-month period during which people would be allowed to withdraw their pension savings from occupational pension funds.

However, proposals were amended after stark criticism from the industry suggested the withdrawal of funds could destabilise the system and spark higher inflation.

"We have analyzed all the pros and cons and came to a conclusion that the move could cause some undesired side-affects in the future," said a spokesman for the Ministry.

Second pillar pension funds were set up in 2005 under the previous government, and cover the majority of working Slovaks.

Newcomers to the labour market are obliged to register with a company pension fund, however, the proposal would allow them to leave the funds between January 1 and June 30, 2008.