GERMANY - The Bavarian regional government is freezing the contributions to its public fund for civil servants instead of paying a promised €35m lift next year, on the back of the financial crisis.
The civil servants pension fund, which started collecting money in 2008, had been promised minimum contributions from the local government of €35m for the first year, €70m for the second and €105m for the third, increasing by €35m every year after that until 2016 when contributions of €500 for every new civil servant will be paid per month.
However, the financial crisis has led to a change in the budget plans and contributions for 2010 will be frozen to €70m, the Bavarian regional finance ministry told IPE.
“This is because of a disturbance in the economic equilibrium, which shows in - among other things - drastically reduced tax income,” a spokesman said.
“In order to achieve a balanced budget for 2010, some consolidations are necessary, which include the part-suspension of contributions.”
Bavaria is one of several German provinces to have created a retirement fund for its civil servants. Lower Saxony’s plans to create a similar fund were halted this year in the wake of the crisis. (See earlier IPE story: Crisis halts pension fund creation)
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