Insurance Companies: Parent's Pension Would Burden Children, Not Increase Birth Rate
The chairman of the board of the Association of Insurance Companies, Mart Jesse, says the government should think more carefully about the planned parent's pension, which he says is not financially sustainable.
The parent's pension, originally an IRL campaign pledge, would essentially reward parents at the end of their careers for having had and raised children. What makes it complicated is the need to accord equal treatment to those who are raising and have raised children in the past. As a result, the pension is one of the most costly proposed measures, requiring an estimated 45 million euros a year to service.
Jesse, the head of the Association of Insurance Companies, said on ERR radio that the association's main objection is that the end does not justify the means.
"If the goal of the legislation is to encourage youths to have more children, we do not understand how paying more money to today's pensioners will [do that]," he said. "In fact we find that the measure is quite irresponsible when it comes to children being born."
He said the budget for pensions is already running a deficit and that today's newborns would inherit a greater burden for supporting pensioners.
Jesse said he agreed with the ideological rightness of the idea to raise birth rates, but said money should be directed to other areas.
"Above all, availability of spots in creches and nursery schools, health crae services and related benefits - these are areas where Estonia has huge problems right now," he said.
IRL MP and chair of Parliament's Social Affairs Committee Margus Tsahkna countered in Postimees that lack of funding was not an issue.
"This was one of the most thoroughly discussed and calculated plans at the coalition talks," he said. "The cost of the parent's pension was computed and taken into consideration in the state budget on the basis of a very conservative forecast."
He said it is fallacious and misleading to claim that the parent's pension would be funded from one lump sum. "It does not in any way affect financing of the existing pension system," Tsahkna said.
Kristopher Rikken