The Governor of the National Bank of Slovakia (NBS), Ivan Sramko, is convinced that the government should use its own resources to cover the deficit in the pension system. In this way, the head of the central bank responded to the question by asking whether it is correct to solve the lack of money in the "pay-as-you-go" pension system by lowering contributions to the second pension pillar. "The state has higher revenues than it had expected and these must be used to cover the deficit," suggested Mr. Sramko. The government faces the continual task of looking for money to cover the deficit in the pension system. Every change to the second pension pillar will bring bigger and bigger problems in the future, he pointed out. In contrast to the government, the NBS is working with long-term outlook on the sustainability of public finances and the needs of Slovakia's economy, he said.
Mr. Sramko said that every investment carries a certain risk, which was clearly communicated when the second pension savings pillar began to function. The risk also affects the first (pay-as-you-go) pension pillar, which does not invest money but reports a deficit. Nobody is able to guarantee the amount of the deficit in the future, Mr. Sramko explained. The central bank considers the safety of the savings system in the second (capitalization) pillar important. The second pension pillar has many instruments to guarantee that no individual investing errors will be accepted and create a safe space for its policyholders, Mr. Sramko added.
From a long-term point of view, there is a high likelihood that yields in the second pension pillar will exceed the inflation rate. From the short-term perspective, it could happen that inflation exceeds the yields. Situations in which inflation is higher than average yields of term deposits or mutual funds are common in the economy. Since the saving of sources in the second pension pillar is of a long-term nature, short-term fluctuations of shares or other assets will not affect the savers in a negative way, claims the NBS governor.
The Finance Ministry is requesting that pension fund management companies increase guarantees for savers in the second (capitalization) pension pillar. "The Finance Ministry and SMER-SD party see these guarantees chiefly as a commitment enacted in the law that pension companies would guarantee return on savers' deposits at least at the level of inflation," said Finance Minister Jan Pociatek at a news conference on Tuesday evening. He said that pension companies currently guarantee no yield to savers, "not even that savers would accumulate at least their deposited principal." The opinion of SMER-SD party is that this fact was insufficiently communicated during the advertising campaign, when the second pillar was launched.
"If the system does not guarantee yield even at such a level that savers accumulate at least what they have deposited in the system, then this system cannot be compulsory and the only solution is to change it to a voluntary system," said Minister Pociatek. The next guarantee should be the strengthening of parent company guarantees for their pension companies, in the event that these find themselves in difficulties.
(EUR 1 = SKK 33.638 on September 12)