José Piñera, creator of the Chilean pension reform that served as a model for the Slovak pension reform, thinks that the first pay-as-you go pillar is a pyramid system based on political promises, the SITA newswire wrote. In his opinion, the state should not function on the basis of a pyramid financial scheme.
"It is a fraud since the state does not put aside money for paying the pensions in the future," he said at a press conference (see more below) during his visit to Bratislava on September 11, claiming also that the state is trying to persuade citizens to believe that they will receive their money.
"What a person saves in his own pension account is more secure than any promise from a politician," he stressed.
After the meeting with Finance Minister Ján Počiatek, Piñera said that, from a short-term perspective, Slovakia should not face any problems in public finance due to the introduction of the second pillar.
"The Finance Minister liked the idea of the reform and I do not know whether there would be any plans to change the main principles of the reform," he said.
He would disagree if 9 percent of the policyholders' gross wage, which is directed to their personal accounts in pension fund management companies, changed four years after the capitalization pillar was introduced. However, he thinks that if the payments into the second pillar dropped to 8 percent, that would not mean the end of the system.
José Piñera: Press Conference, Conservative Institute, Bratislava, September 11, 2008
Conservative Institute organized another of the 2008 CEQLS Lecture. José Piñera, President of The International Center for Pension Reform was our guest speaker on September 11, 2008 in Bratislava. More information is available here.