Banking union debates pension funds

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Pension funds were on the agenda of the congress of the SBSI bank workers' union, held in June 1997. Funds for bank employees were formed in Portugal to guarantee pension commitments contained in employment contracts, but their operation raises a number of important issues.

The congress of the South and Islands Banking Union (SBSI- Sindicato dos Bancários do Sul e Ilhas), which met from 20 to 21 June 1997, discussed issues relating to pension funds.

Social protection for the majority of bank employees is guaranteed by the social security system, but only insofar as occupational illness, family and unemployment benefits are concerned. The remaining fields of social security are the responsibility of the employer, and annual contributions are specified in the employment contract.

However, with respect to pensions, contribution levels have been the cause of concern for some banking institutions, specially because of the significant increase in the number of early retirements which upset the balance between the number of active workers and pensioners. It was thus considered necessary to reappraise the problem in order to create the conditions required to meet commitments laid down by the contract. As a result, pension funds (fundos de pensões) were formed to guarantee commitments in an ever-evolving situation.

However, the operation of pension funds itself raises a number of issues:

• not all commitments are covered because the funding mechanism has been introduced only gradually on the grounds of the costs involved;

• rights cannot be guaranteed when an employee moves to work in another sector of the economy; and

• there is no provision for a guarantee fund to ensure the fulfilment of the legitimate expectations of workers in case the banking institution in which they work were to become bankrupt or if the pension fund on which they rely were to run into difficulties.