Cabinet votes to implement safety net

Plan for limited safeguard of pensions opposed by one minister: Finance Minister Bar-On; 20 in favor.

Ronnie Bar On 88 248 (photo credit: Ariel Jerozolimski)
Ronnie Bar On 88 248
(photo credit: Ariel Jerozolimski)
The cabinet approved on Sunday a limited pension safety plan, paving the way for the long-awaited implementation of the Finance Ministry's economic and financial stimulus package. The vote passed with 20 ministers voting in favor, and one minister, Finance Minister Ronnie Bar-On, voting against. Once functional, the plan is set to provide protection over pensions retroactively to November 30. Cabinet members had spent the start of the day discussing whether to activate the safety net immediately, or whether to delay its implementation until a later date; Prime Minister Ehud Olmert supported the former position, while Bar-On supported the latter. "Our central concern is for the individual pensioner who saved for years to get to the age of retirement, as opposed to other nations which worry about economic companies, the wealthy, and stockholders," Olmert told ministers at the start of the meeting. "There are hundreds of thousands of citizens in need of protection, and our intent is to find the most correct and balanced solution," Olmert continued. "My intention was to create a plan regarding a broader agreement, and to do so with the least amount of noise which would shake the Israeli economy." "We want to give protection to pensioners, and on the other hand, to reduce the amount of unessential expenses which would place the government in a difficult position," he added. "There isn't one official in the government who doesn't want to give protection to pension savers," Olmert said. "I reject out of hand the claim that there are [people in the] Treasury [who don't care about] these savers." "[The question is] when to begin [the safety net]," the prime minister said. "The Treasury and the finance minister believe that we should postpone the implementation. The Bank of Israel governor, who is the advisor to the government of Israel, believes we must implement it immediately, and I accept his advice and I hope that the decision today will be the immediate implementation of the safety net plan." Earlier Sunday, Bar-On told Israel Radio that if lawmakers in Israel did not approve the proposed economic stimulus package, the result would be a disaster. "The plan would provide work for thousands of people and ease the credit crunch," he said. "It contains tax relief, market assistance, and would supply much needed oxygen to the operation of the economy." The cabinet is expected to vote on the plan later on Sunday. Should it pass there, it will then go to the Knesset Finance Committee for a final vote. "If it does not pass in a vote tomorrow, there will be a disaster," Bar-On warned. Last week, Olmert, together with the finance minister, announced at a press conference that an agreement had been reached regarding the economic stimulus package and the accompanying pension plan safety net. According to the plan, the safety net will apply to those aged 57 and over with accrued pension savings of up to NIS 1.5 million. However, it will guarantee only part of the funds and will not be retroactive. At the time, Bar-On expressed reservations about the compromise plan, telling reporters that while he agreed to it, he did not think that measure to protect pension plans was urgent. "Public opinion, and especially the public's state of mind, which has been profoundly affected by the tempestuous political times we face ahead of elections, put pressure on the Treasury to provide a solution - the safety net," said the finance minister said. "We don't see the urgency in terms of the markets' behavior in implementing the pension safety plan at this point in time."