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Government Scrapping Certain Restrictions in Second Pillar Due to EC
Monday 08 February 2010 Zoom in | Print page
Bratislava, February 8 (TASR) - The Labour, Social Affairs and the Family Ministry on Monday submitted an amendment to the Old-age Pension Savings Act - a move made in response to reservations expressed by the European Commission (EC) towards certain investment restrictions applied to pension funds in the so-called private second pillar of the pension system.
"The criticised shortcomings have been corrected and the discriminatory factors removed by the proposed changes, which loosen investment conditions, as well as create wider scope for investments outside the eurozone," reads the document submitted by the ministry for comments. When approved, the amendment should come into effect on the same day that it is signed by the president.
The EC expressed its reservations towards regulations that currently give the Slovak central bank (NBS) power to restrict a pension fund to investing up to 50 percent of the value of its net assets in securities issued or guaranteed by eurozone-member states. According to the EC, such a regulation is at odds with EU legislation, especially in terms of the free movement of capital.
The proposed amendment broadens the investment options vis-a-vis the securities of all EU-member states, including those in which the euro isn't the legal tender, to 50 percent. (The current limit for investments in countries without the euro is 20 percent.) In order to reduce investment risk, the amendment introduces a condition that negotiable securities should be denominated in the same currency in which the value of pension-fund unit is expressed.
The EC's requirement was communicated on January 28 in the form of a so-called reasoned opinion, which represents the second phase of infringement proceedings. "If the EC doesn't receive a satisfactory reply within two months, the matter may be submitted to the EU Court of Justice," the EC warns in its statement.
According to the EC, the current version of the law, which was criticised by EC for the first time in June 2008, allows relevant state bodies to discriminate against investments in securities issued or guaranteed by EU-members states that don't belong to the eurozone, as well by as other countries. "The explanation provided by Slovak state bodies, according to which the regulations aim to reduce credit and foreign-currency risks, isn't relevant in the Commission's view," reads the EC's statement.
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