“Our main priority is to highlight to the public the existence and operation of an alternative, highly effective savings mechanism that leads to ensuring a satisfactory supplementary retirement income,” said the president of the Hellenic Union of Professional Union Funds (ELETEA) and the Hellenic Chamber of Commerce and Industry. Christos Nounis from the podium of the 3rd occupational insurance conference.
According to Mr. Nounis, “at the core of the Union’s actions is the protection, improvement and promotion of the rights of our insured members”.
The president of ELETEA stressed that “the study of IOBE is clearly the crown of these actions, being a useful tool for empirical analysis of the operation of the institution that must be processed and utilized by the State and the competent Ministry of Labor.
Institutional representation and active participation in high-level European institutions, such as EIOPA with the hiring of the General Secretary of EL.ET.E.A. in its specially established Advisory Committee, the Committee of Stakeholders on Occupational Pensions Stakeholder Group (OPSG) and the institutional participation of EL.ET.E. in the working groups and actions of AEIP (The European Association of Paritarian Institution) as a full member. The operation of an Information Office for the establishment of a professional fund, in order to provide comprehensive information to potentially interested social partners about the required licensing procedures and operation of a new TEA. A series of interventions and meetings of the Union with competent bodies, supervisory authorities and general influential persons for the promotion of the demands of the sector and detailed communication of the positions and proposals of the Union for the modernization and the improvement of the operating framework of TEA ”.
Mr. Nounis stressed that “The purpose of all these collaborations is to promote, through joint actions, the institution of occupational insurance and to cultivate in the public opinion the value of the concepts of supplementary insurance, financial literacy, savings and professional investment management. promoting the development of the institution of occupational insurance on the basis of good international practices, of course incorporating proposals formulated in the study of IOBE.
In fact, according to official ministerial statements, the process of elaborating the institutional interventions is expected to be completed by the end of the first half of this year, after the necessary relevant consultation with the interested parties of the sector. It is therefore clear from the above that the next period of time is crucial for charting the future evolutionary course of the 2nd Pillar, he noted.
Mr. Nounis stressed that “in the current situation there are 2 critical elements that must be used effectively by all those involved in occupational insurance if we want to see significant penetration of the institution in the labor market and in our insurance system.
The first element concerns the latest initiative of the Union for the elaboration of a sectoral study by IOBE, on the occasion of the completion of 20 years of operation of the institution in our country. The study and its very important findings are now a useful tool, a roadmap that holistically records the empirical operation of the 2nd Pillar from its establishment in 2002 until today, while proceeding with targeted proposals for the development of the institution which have empirical, Successfully tested, international background. This tool was missing is true from the political decision-making table of the Ministry’s occupational insurance supervisor and it is necessary to take it seriously in the next planned institutional interventions in the 2nd Pillar.
The second element concerns the fact that in the last year the competent Ministry of Labor – with the assistance of technical assistance from the European Supervisory Authority (EIOPA) – is working on a new regulatory framework that is expected to contribute to the development of its institution. occupational insurance on the basis of good international practices, of course incorporating proposals formulated in the study of IOBE. In fact, according to official ministerial statements, the process of elaborating the institutional interventions is expected to be completed by the end of the first half of this year, after the necessary relevant consultation with the interested parties of the sector.
It is therefore clear from the above that the next period of time is crucial for charting the future evolution of Pillar 2. In other words, it could be said that the above 2 elements of conjuncture can be an opportunity or a threat for the institution of occupational insurance depending on the policy measures that will be adopted for the substantial further development of the industry.
Opportunity, because utilizing the content of the IOBE study that summarizes the empirical evaluation of the first 20 years of operation of the institution but also the international experience based on good practices, the State can – by adopting the best support policies adapted to the Greek reality – ensure sustainable and long-term development of the 2nd Pillar.
And a threat, because if the above 2 elements are not used effectively or if the new regulations of the Ministry move in the wrong directions that will not have a justifying background, based on the special domestic operating conditions of occupational insurance, then the institution risks following a stagnant future if not descending path.
But what are the fundamental features of the 2nd Pillar and Occupational Insurance Funds on which any reform agenda can be based? The TEA:
– They are optional schemes that are established after a partnership of the social partners (employers / employees) offering additional insurance benefits to their members
– They are NPIDs of non-profit character, ie they do not seek any profit from their activity, on the contrary they take care of the return of any surpluses to their insured members.
– They are based as legal schemes, on long-term commitments between employers and employees, subject to very strict supervision and therefore enjoy significant reciprocal tax benefits for their insured members.
– They are a complete solution of systematic and mainly long-term savings to increase retirement income
The IOBE study thoroughly illuminates the special features and fundamental differences of the 2nd Pillar from the other 2 insurance pillars of the country, emphasizing the fact that occupational insurance is not compulsory like social nor commercial like private. It is simply a possibility of the social partners that may or may not be activated, a complementary tool for pension management and rewarding of human resources that can be used effectively by employers in good cooperation with employees. For this reason, the study assesses as important the maintenance of strong tax incentives for the retirement benefits of the occupational funds in order for the institution to penetrate the labor market and become a lever for the development of the Greek economy.
An institution that is growing rapidly worldwide, and it is characteristic that in the last 12 years since the crisis of 2008, it has more than doubled in size (x2.35 times), with the assets of TEA accounting for 64% of world GDP, ie $ 54 , 1 trillion !!! Our country unfortunately to this day remains a tail among the OECD countries, with the size of TEA in terms of value of assets (Assets) approaching only 1% of GDP.
In particular, the 2nd Pillar currently numbers 29 TEA, of which 25 are IESP-TEA and the 4 former auxiliary, compulsory TEA insurance. Their total assets, according to 2021 data, reach € 1.84 billion, from 1.64 billion euros at the end of 2020, increased by 11.7%.
In fact, in an environment that for another year was overshadowed by the effects of the pandemic, with high volatility in international markets and strong economic uncertainty, the average annual weighted return of the Greek TEA portfolio in 2021 was significant approaching 6.1%. The return is significantly higher than the average interest rate levels that prevailed in the money markets, highlighting the benefits of regular, long-term and sufficiently diversified investment, through the use of high quality professional management of TEA. It is emphasized here that the above average good value recorded by the assets of the Greek TEA for 2021, is a continuation of the positive 4.5% average annual return of the last decade (2011-2020).
Nevertheless, the institution in our country lags significantly behind the other developed economies, for the reasons that are described crystalline in the IOBE study. Reasons and ideologies that remain to this day and are an obstacle to the development of the institution, which while internationally is a solid insurance pillar, in Greece is the smallest of the three, with IESP-TEA in fact representing only 0.1% of GDP.
However, the interest of the social partners in the establishment of TEA is now more intense than ever since the institution started in 2002. We hope that the environment will become more attractive after the forthcoming reform of the institutional framework moving in the guidelines of the proposals mentioned in the study. of IOBE and the majority of which are permanent positions of ELETEA:
– Introduction of the possibility of establishing multi-employer occupational insurance funds without the obligation to have a relevant professional relationship between employers – an object whose usefulness will be discussed extensively on both days of the Conference
– Modification of the supervisory status of TEAs accompanied by targeted measures to accelerate the licensing and control work of occupational insurance companies. The existing fragmented and severely understaffed supervisory structure of TEAs combined with the rapid increase in their number in the last 5 years and the expected continuation of the upward course of the institution make it imperative to change the supervisory operating model towards the integration of institutions and procedures.
– Maintaining strong tax incentives for retirement benefits, as a key incentive to boost savings, by keeping tax-free lump-sum benefits, as a key rather than an occasional incentive for long-term savings, as evidenced by empirical data. . Within a broader framework of universally defined conditions, as well as the application of a staggered tax incentive, when these conditions are not met and milder taxation for the payment of a pension.
“Increasing the degrees of freedom of the investment management of the assets of the funds by the Investment Managers”.
Source: Capital
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