SLOVAKIA - The Slovak government is to scotch a legal amendment that would allow second-pillar pension schemes to invest in real estate.

Slovak media reports last week claimed labour minister Viera Tomanova, who had originally mooted the idea of allowing indirect property investment, may bow to pressure from junior partners in the coalition government, to omit the provision from a revised amendment to the country's social insurance law.

A parliamentary committee for social affairs had approved the omission. And Tomanova had backed real estate investment in the interests of diversification and in order to "widen the possibilities of using investment instruments".

The left-dominated coalition government's proposed amendments would strengthen first-pillar provision - at the expense, opponents believe, of private provision.

Yet the second pillar, which would lose its mandatory force under the amendments, has proved popular: when more workers than expected opted for second-pillar provision, the impact on the social insurance agency's liquidity jeopardised Slovakia's fulfilment of the Maastricht criteria for euro (currency) adoption.

Ivan Barri, executive director of the Slovak Pension Funds Association, expressed scepticism over the latest round of political horse-trading.

"They'd only be able to invest in Slovak property funds - not directly and not overseas," he said. 

"I don't know if they'll stop it. It depends on the government's mood," he added. "There's a possibility that it will change its mind. As a rule, you get one decision on Monday and quite another by Thursday.

"There has been a long period of discussion, followed by nothing," added Barri.

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