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National Assembly Passes Pension Reform (II)

Ljubljana, 04 December (STA) - The National Assembly passed with 76 votes in favour and none against the government-proposed pension reform on Tuesday. The reform tightens retirement conditions by raising the retirement age to 65 years or 40 years of pensionable service. It is to step into force on 1 January and is expected to bring in EUR 150m in 2013.

All parties underlined in the debate that a pension reform was desperately needed. The first attempt at the reform failed a year and a half ago as the proposal adopted by the previous ruling coalition was defeated in a referendum.

The reform has enjoyed bipartisan backing throughout parliamentary passage and today, opposition parties praised Labour, Family and Social Affairs Minister Andrej Vizjak for taking into account their proposals.

At second reading over 100 amendments were incorporated into the government's proposal based on agreement reached in negotiations between the government, trade unions and employers. Additional 20 amendments have been endorsed today.

However, the KSJS confederation of trade unions representing some 161,000 public sector employees said they would not sign the agreement on the reform reached in talks with social partners.

The KSJS opposes the government's decision to eliminate the years of study from years of pensionable service. They wanted a gradual three-year transition period, but the government was unwilling to strike such a compromise.

Under the reform, men and women are to get the right to full pension when they turn 65 and have at least 15 years of pensionable service, a point in which the law is identical with the pension reform crafted by the previous government.

The Institute for Economic Research (IER) found that average retirement age would increase by around two and a half years for women by 2020 and by nearly a year for men, according to Vizjak.

Currently, women are eligible for full pension at the age of 63 or 38 years of pensionable service, while men are eligible for full pension at the age of 65 or 40 years of pensionable service.

But data for 2010 show that Slovenian men in fact retire at an average age of 61 and nine months and women at 58 years and five months.

The reform also extends the basis for pension calculations from 15 best-paid years of service to 24 best-paid years. Men will be eligible for 57% of average pay during that period and women for 60%.

The IER found that Slovenia would save EUR 1bn in five years, the minister said. In six years, the funds saved would equal the cost of Slovenia's biggest investment ever, the EUR 1.3bn construction of new generator at TEŠ power plant, Vizjak illustrated.

Opposition Social Democrats (SD) deputy Andreja Črnak Meglič said that the party endorsed the reform because the government crossed out provisions under which payments not stemming from social contributions would have been removed.

Opposition Positive Slovenia's (PS) Barbara Žgajner Tavš said that "the minister acted wisely and listened to serious warnings from the opposition".

Coalition Democrats (SDS), the People's Party (SLS), New Slovenia (NSi) and the Citizens' List (DL) pointed to the advantages of the reform bill.

The DL's Truda Pepelnik underlined above all transparency of pension calculations, while the Pensioners' Party (DeSUS) highlighted that pensions would be adjusted to pay in 2013. However, this adjustment must not exceed EUR 50m, said Jana Jenko.

The SLS said that the pension reform could help Slovenia break out of the crisis. "Every year, conditions worsen also for the future pensioners, because the pension base is cut annually," said Mihael Prevc.

Matej Tonin of the NSi said that anybody who would attempt to reject the reform in a referendum or otherwise would be fighting for lower pensions and unsustainable public finance.

Romana Tomc of the SDS pointed out that the rise in pensionable age would not happen due to strict regulation but due to incentives promoting that people work longer.

"Above all it is important that it no longer misleads people with false expectations regarding the height of their pensions," said Tomc.

Minister Vizjak denied in his address to the National Assembly claims that the reform could not hold for long. "In 2060 we will have to spend around EUR 1bn less on pensions than if there were no reform."

The Employers' Association welcomed the passage of the reform. Jože Smole told the STA that the employers' basic goal - that their expenses would not increase - has been achieved.

Initially, their goals were more ambitious, Smole said, but given the economic situation it was hard to get anything more from the negotiations.

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