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"2003 will be the year of the pension" said the Supervisor of Capital Markets, Eyal Ben-Chelouche, in December 2002. Silvan Shalom was then finance minister and relations between the two were chilly.

Shalom did not particularly appreciate Ben-Chelouche's work and even considered replacing him, so it took great daring and no small measure of stubbornness on Ben-Chelouche's part to make such a statement.

But after the elections, Finance Minister Benjamin Netanyahu arrived and fell head over heels in love with Ben Chelouche's proposed pension reform. Thanks to his support, the Knesset Finance Committee ratified the reform last week.

Ben-Chelouche's declaration was based on a sober analysis of the pension sector and the agreement of the budget division and division chief Uri Yogev that the pension funds' actuarial deficits would have to be resolved this year.

The position was strengthened by the fact that this year, for the first time, the state will fund the deficit in the Construction Workers Pension Fund, for which a trustee was appointed five years ago.

Another budget aspect is the government subsidy of the veteran and new pension funds in the form of designated bonds with guaranteed yields. The annual cost of those bonds amounts to more than NIS 1 billion.

All of this, plus the desire to see pension funds on the financial markets, even if gradually, continuing a move that started in the 1980s with the provident funds, and the 1990s with the insurance companies, all made 2003 the year of the pension.

After legislation is completed, the treasury will face a no less complex task - proving that taking over management of the pension funds from the Histadrut labor federation, achieves its goals. The first mission will be to determine criteria for the appointment of trustees and appointing them.

This will be entrusted to a public commission headed by a judge and subject to the supervisor of capital markets. This will provide supervisors and finance ministers with access to and involvement in management of the funds.

We can only hope the commission knows how to block over-involvement by finance ministers and treasury officials, possibly even creating a separate authority to regulate the pension funds.

The second mission will be entrusted to the fund trustees, scanning the funds commitments and annulling illegal agreements, ensuring tat he funds assets used by the Histadrut over the years are returned to their rightful owners.

The third, and no less important, mission is creating standards for transparency and reporting to members and the public. The trustees must be made to report regularly on the situation of the assets, the portfolio, wages and benefits for fund managers. As the funds are transferred to trustee managers, the burden of proof of the move's advisability is on the treasury.