Until Thursday senior Finance Ministry officials were still trying to stop the erosion. Most were vehemently opposed to a safety net for pension funds. But pressure came from all sides, and the treasury chiefs understood they had no choice but to present a plan to save the pension funds soon.
First to buckle was Finance Minister Roni Bar-On. Labor is calling for his dismissal for his poor handling of the crisis, and Histadrut labor federation head Ofer Eini is due to declare a labor dispute Sunday to force the treasury to agree to a broad and expensive safety net. This is the first step to a possible general strike in two weeks.
Benjamin Netanyahu (Likud), Ehud Barak (Labor) and Tzipi Livni (Kadima) all want the net. Everyone wants to be liked before elections.
But the treasury chiefs see the move as a big mistake. Instead, they want a plan to protect savers, though not all of them. That will disappoint the public, which expects the treasury to restore all its losses from the beginning of the year. The treasury plan will not attempt to restore losses, which would be impossible considering the large sums involved.
Savers would be scrutinized to see if they had other pension sources, and an income test would be applied that would leave most savers unprotected by the plan and limit the treasury's commitment.
A senior treasury source told Haaretz that it was "utter foolishness to institute a safety net because stocks and bonds are falling because they are falling all over the world, and the whole world is going into recession." The official said that only NIS 200 million a day in pension funds was being withdrawn, and another NIS 200 million a day was being moved to more solid funds at investment houses.
It should be noted that no other country has instituted a safety net for savings or pension funds. There were bank and insurance-company bailouts, but not of private savers, because the world understands this is not the government's responsibility.
Moreover, savers in pension funds have not lost. Between 2003 and 2007 they earned 60 percent on their investment. In 2008, losses were 20 percent.
The populist demand for the safety net is illogical because if implemented, pension-fund directors will take greater risks because the government is backing them.
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