Pensioners Unions Challenge The Merger Of Insurance Funds

Pensioners Unions Challenge The Merger Of Insurance Funds

Under proxies of some employees  of social insurance authority , solidarity of union of pensioners and the defense of insurance funds, as well as the general union of pensioners, the lawyers of the Egyptian Center for Economic and Social Rights today  submitted the appeal #  34 238 /65jy against the government decision to merge the social Insurance fund for workers in the government sector with the social insurance fund for workers in business and private sectors.

The  appeal mentioned that that this case is part of social resistance  in order to keep insurance funds and to protect  the insurance system from tampering under  weak allegations  that in fact harm insurance systems and funds and do not do any good.

Allegations that merger reduces overheads  and administrative expenses and improves insurance services are only allegations that are not realistic  and  harm  the fairness and efficiency of the insurance system.

The appeal stated that the real objective behind the merger is to cover for the deficit in cash flows of the private sector funds due to  that private business owners refrain from paying workers’  insurance premium . Instead of the government pursuing them  , they started to implement the proposed merger , Boutros Ghali , the  former finance minister started it  in order to cover the deficit in private sector funds with the surplus of the public funds. Ghali hired Booz Allen , with direct contracting, of which his in laws are major share holders to implement the merger plan which cost millions of pounds,  contrary to the excuse of reducing expenses.

The appeal  also revealed that in FY 2009/2010, the state fund  lent the public  and private sectors EGP 400 million , without getting any return on investment despite the agreement on paying the debt on installment basis.  In FY 2010 / 2011, the state fund lent the private sector fund once again EGP 500 million pounds.

This time state fund insisted on the payment of  8% annual return on investment for this loan, by installments,  because of the inability of the private sector fund to meet its commitments  because of  cash flow deficit  and not address the reasons for this deficit .

The Egyptian Center for Economic and Social Rights said  that the integration of both funds will not save the private sector fund , but will cause deficit in the state fund . The merger is a breach of  the justice of the insurance system, as the accounts ,subscriptions and terms of the state fund are totally different from those  of the private sector fund, which requires the need to separate them in order to preserve the rights of the insured in each fund.

The Egyptian Center  said that this case comes in a series of  cases filed by the Center  on behalf of pensioners for the protection of insurance funds ,recovering them from the government  and claiming their independence of state budget.

The Centre succeeded in forwarding one of those cases to the supreme constitutional court to decide the constitutionality of presidential decree 422 / 2005 which made the minister of finance and minister of social insurance capacities  held by one person.

As well, the supreme constitutional court will decide the constitutionality of the determination of the constitutionality of the second item of article #8 of the code of state budget, which allowed the minister of finance to consider insurance funds part  of state revenues  and consider  insurance expense   part of state expenses.

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