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The government will use the assets – which will be transferred between the end of this year and 2012 – to meet its budget-deficit target and pay part of the state's debts currently held by banks, according to Helder Rosalino, secretary of state for public administration.
Maria João Louro, business leader for retirement, risk and finance at Mercer, said the government believes the "exceptional measure" is the only means of avoiding tax hikes while meeting its public deficit target. The measure aims to transfer the pension funds' liabilities – specifically, liabilities related with pensions in payment – to the Social Security regime.
Since this particular transfer only relates to pensions in payment without future increases, the current funding level of the first-pillar system is unlikely to be affected, according to João Louro. "To control the current and future resources of the first pillar, it will be necessary to implement an effective governance policy and a continuous monitoring process on cash flows (due to the fact we are on a pay-as-you-go system)", she said.