THE CRISIS IN SOCIAL SECURITY OPENS THE DOOR
Tsakos entry – OTE , Interamerican and Athens Stock Exchange follow.
With the insurance system sickening, the creation of professional funds is now a step forward and more and more private business groups - companies are taking initiatives to set up their own.
A Professional Insurance Fund was created a few days ago by Tsakos Group, and three other companies have begun the process of obtaining the necessary license for their merchant’s network; OTE, Greek Stock Exhanges and Interamerican. At the same time, two supermarket chains, AB Basilopoulos and Sklavenitis and a Logistic company are ready to move on this initiative with the aim to support their employees.
Today, out of the 18 funds operating in our country, 4 are compulsory and 14 are optional.
Their portfolios were around 1.3 billion EUR on 31/12/2017 (last available data). The investments’ structure of the TEAs’ is analyzed as follows: Deposit 54.9 million (4.6%) Bonds 742.3 million (62.2%), shares A / K 243.1 million (24.6%). Stocks of € 87.7 million (7.4%) and Assets14.5 million €. A business management consulting firm Accenture, Interamerican, Johnson and Johnson Hellas AEBE and Janessu - Cilag Pharmaceuticals AEBE, and various industries such as petroleum companies staff, insurance companies, grocery stores, casino and pharmaceutical companies staff, hold Professional Insurance Funds.
Tsakos Group of Companies is the first Group of Companies, in the shipping industry, to take advantage of the Occupational Insurance Institution.
Its initiative applies to the employees of the Group, both in Greece and abroad. Partners and members of affiliated companies can optionally participate in the Fund.
Reasons
There are two main reasons that lead to professional insurance. On one hand, crisis in the social security system with retirement benefits turning into aids and health-care benefits downgrading.
The second reason being the satisfactory revenues achieved with this credible supplementary insurance solution. It is characteristic that in 2017, the profit of the three largest mandatory funds, representing about 90% of TEA's assets, ranged between 4.76% and 9.7% and this was achieved despite the fact that their exposure in Greek bonds was balanced.
If the supplementary benefits were awarded by professional funds, an amount of 3.6 billion EUR would not have been included in the country's pension expenditure. In this way, the pension expense would not have exceeded the threshold of 16.1% of the GDP that is the ceiling in E.U. and lenders would not require interventions of 2% of the GDP by cutting down pensions and reducing the tax-free limit.
As insurance representatives estimate, professional Insurance Funds are presented today as a convincing supplementary insurance solution on the basis of the second pillar. In Greece, only a fraction of the reserves of insurance funds are under professional management. Even in the case of active management, the investment approach is exhausted in the bipolar bonds or fixed titles.
How does the OPF invest?
Αccording to the current institutional framework, OPF's investments are mainly created on organized markets (only 5% on unlisted items). Derivatives can only be made substantially for hedging and up to 5% of assets (including venture capital investments). They can not come from a borrowing product.
For the adequacy of the diversification of the portfolio, the following safeguard rules / OPF investment ceilings are foreseen: Up to 5% in a company or up to 10% as long as the company belongs to a Group and it is the funder, in order to minimize any conflict of interest. The total of investments in an issuer may not exceed 15% of the OPF's assets (with some exceptions for publications guaranteed by member states).
Also, up to 25% in the case of EU credit institution bonds. The maximum investment property ratio is set at 20% of OPF's assets, investing up to 70% in equity, and corporate bonds in financial institutions in Greece or in EU countries and other non-EU countries. OPF invests up to 20% on bank deposits and treasury bills but not more than 25% of the assets in the same credit institution (40% if securities and derivatives are added).
What are the OPFs and what benefits do they provide?
Professional funds are non-profit-making public legal entity, as opposed to the purely private nature of private insurance, with full administrative and financial independence. In case of dissolution, the product of the liquidation to which it belongs the employer's contributions as well, are distributed according to the insured expectation of the insured. They adopt good administration, ensure transparency and consistency of contributions. Contributions to OPF are exempt from insurance premiums and intermediary fees, ensuring a lower cost for their members against equivalent costs to private insurance companies. They provide significant tax incentives under the law 4172 / 2013, with the exception of the contribution from the taxable income of the member. The provision of pension benefits necessarily follows the funded system. They manage their assets professionally, achieving both the optimal investment result for their portfolio and the effective management of the risks that arise from them.
They give the state a share of social protection spending by reducing the shocks suffered by the main social security from unfavorable demographic and economic developments. They are subject to a rigorous legislative framework that is in line with the European Directives, three State Audit Authorities (National Audit Authority, the Capital Market Commission and the Ministry of Labor) and independent audit (Auditors / Internal Auditors).
An Occupational Pension Fund was created a few days ago by Tsakos Group, and three other companies have begun the process of obtaining the necessary license for their merchant’s network; OTE, Greek Stock Exhanges and Interamerican.