12.9 C
Nicosia
Sunday, April 21, 2024

Calls on the Government to adopt the recommendations for an actuarial study for the Fiscal TKA

Must read

ΚαλεΙ την ΚυβΕρ&nu ;ηση να υιοθετorσει τις εισηγorσε&iota ;ς για αναλογιστικor μελΕτη για τ ο ΤΚΑ το Δημοσιονομικo

The Fiscal Council calls on the executive branch to adopt the recommendations of the actuarial study on the Social Insurance Fund, which, among other things, calls for consideration of increasing investments in non-government securities to enhance diversification and its returns, as well as in the formulation of a written funding policy.

The Council welcomes the completion of the study and notes that the study adopts the SC's recommendations on the TKA and notes that the Central Government's debt to the TKA “has now reached dangerous levels”.

According to a statement from the Board of Directors, the study recommends the “formulation of a strategic plan for the revision of the existing investment policy of TKA”, since currently 98.6% of TKA's assets are invested mainly in non-marketable government deposits, while the remaining assets are invested in medium-term government debt (bonds) and cash deposits in Cypriot commercial banks.

“TKA could consider increasing the percentage of its assets invested in non- government securities, with the aim of enhancing the diversification of its investment portfolio and achieving higher returns…”, the study states.

The Board of Directors also refers to the points of the study that in addition to the development of an investment policy, for the purposes of strengthening the financial management of the TKA, the security of rights and justice between generations (intergenerational equity), it is also recommended to the Government to formulate a written policy funding.

The Funding Policy establishes a series of rules for contributions and/or entitlements, to ensure that social security entitlements are financed in a fair and sustainable manner, the study states.

At the same time, the SC welcomes the revision of the assumptions in relation to the previous study (2017 data), noting that the assumptions are judged to be more realistic in the majority.

It also notes the retention of Labor's case for a gradual reduction of the so-called 'reserve', (ie the Central Government's debt to the Treasury) and we welcome the suggestion of a gradual reversal of the unfortunately entrenched practice.

It is also pointed out that in the study the growth rates of contributions are maintained, as well as the interconnection of the retirement age with the increase in life expectancy. We also note the important role of net migration in the coming years (of around 8,000 people per year) as a central assumption of the study.

“We express our support for all the efforts made by the Ministry of Labor and Social Security to maintain, not only the viability of the TKA, but also the reduction of the financial burden that this entails for the next generations”, states the Board.< /p>

It also calls on the executive and legislative powers to adopt the recommendations of the Actuarial Study towards the formation of a tangible, but gradual reversal of the current practice by which the TKA “reserve” is utilized for current expenses.

“We further note that the debt of the Central Government to the Fund has now reached dangerous levels. We agree with the Study that under the scenarios of unfavorable economic circumstances, the Government and the Fund will very likely come under pressure at the same time. This high probability can overturn estimates radically and in a very short period of time”, concludes the Board.

Source: KYPE

Source: reporter.com.cy

- Advertisement -AliExpress WW

More articles

- Advertisement -AliExpress WW

Latest article