The Estonian pension reform must be taken off the table, the economy must not only help the people without income, but also the big exporting companies, and all the energy must be put into solving the coronavirus crisis, not into political games, writes Kristina Kallas, the leader of Estonia 200, a liberal Estonian political party.
I was angered by the Estonian government’s announcement on Thursday, 19 March, that unless the president, Kersti Kaljulaid, signs the law on making future pension savings voluntary, the government would decide to suspend its payments to the fund altogether.*
I read the message many times – so that I would not accidentally misunderstand – because I could not believe the government had chosen political blackmail as a working method during the coronavirus crisis. But no matter how many times I read it; it could not be read otherwise.
The government was on the verge of threats. It was clearly stated that the pension payments (to the fund) would be temporarily suspended (at the most ill-considered moment of them all, if you may), if the so-called pension reform did not start immediately.
No explanation was given as to why we need to push through a badly prepared reform right now. How does this help resolve some of the current crisis issues? How does it help us get out of the crisis in the long term by letting people take cash out of the long-term investment funds?
If the law is passed, people will not be able to withdraw their money until 1 September 2021 anyway. How does it improve the current situation? No explanation, no reasonable grounds were put forward.
All the attention needs to be focused on crisis management
So far, I have refrained from criticising the government because it is necessary to let the leaders lead in times of crisis. But on Thursday, I felt that I no longer wanted to be quiet. I could even agree with all the arguments put forward by supporters of the reform, there is a quibble about low fund productivity versus people’s expectations about how fast their money will grow. But I do not agree that now is the time to go irresponsibly with this kind of game with people’s long-term assets.
It is still a poorly prepared law, without forward thinking, and instead of pushing through reform with bad and unpredictable results, dear Isamaa party (the original initiator of the reform – editor), all the attention now needs to be focused on crisis management instead.
The government should focus on forecasting different scenarios of the economic crisis that has already unfolded before us. It is strongly recommended to listen to people who know the data and have the knowledge. But the government has been deaf towards expertise when it comes to the pension law. The task of the government is to stop the pandemic and save Estonia’s entrepreneurs and employees from bankruptcy. Pension law disputes wait for calmer times.
The government must clearly state the reasons for any decision, showing how one or the other resolves the crisis. At a time when people are expecting, above all, the government’s confidence about the future, one government party is doing the exact opposite, resuming political blackmailing and creating more insecurity in the psychological state of society, in the economy and the financial markets.
Consumers are panicking, companies are in a state of shock and the extortion policy has probably not given anyone any more confidence. The subject of the pension reform must be taken off the table. The government must not only help the people who have no income, but also the big exporting companies that might be still doing fine today, but, with every new day, their export markets are losing confidence. All the energy must be put into solving the crisis, not the political games.
*The current Estonian coalition government, comprising the Centre Party, the Estonian Conservative People’s Party and Isamaa, recently forced through the parliament the so-called pension reform that makes joining the second pension pillar, previously mandatory, voluntary for everybody; in addition, people could take out the money already saved in the second pillar. However, president Kersti Kaljulaid refused to sign the Pension Reform Act into law twice and has petitioned the Estonian Supreme Court to declare the act unconstitutional.
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The opinions in this article are those of the author.