Confiscation of Caixa Geral's pension fund was "an emergency solution"

Bagão Félix, Finance Minister between 2004 and 2005, said that the transfer of the entire Caixa Geral de Depósitos pension fund to the Treasury was an emergency solution made necessary by pressure from Brussels on Portugal to reduce its year end deficit.

"The nationalisation of pension funds had already been carried out in other countries, such as France and Germany," Bagão Félix explained MPs at a parliamentary inquiry committee that has been hearing about recapitalisation plans for Caixa Geral.

In September 2004, Portugal urgently needed to find around €2 billion to comply with the Stability and Growth Pact rules limiting the budget deficit to 3%. The previous year, Finance Minister, Manuela Ferreira Leite, had appropriated the CTT (post office) pension fund and reduced the 2013 deficit by 0.7%.

Félix admitted that he did not like to plunder the Caixa Geral pension fund to lower the deficit, but assured MPs that the bank's financial situation has not got any worse as a result.

The former minister claimed that when he took over the job in 2004, the transfer of a portion of Caixa's pension fund had already been planned, a decision that made by Manuela Ferreira Leite.

The government, explained Félix, had only a year to reduce the deficit to below 3% of GDP and there was a push on to claw in extra revenue. The initial operation provided around €1.4 billion from a sell-off of State-owned assets, but "we needed more revenue."

When the Santana Lopes government failed at the end of 2004, Bagão Félix considered that he had no "moral authority" to sell off the State-owned real estate and a proposed leaseback scheme was suggested but Eurostat made it clear that any money thus raised would not count towards deficit reduction.

Prime Minister Santana Lopes announced his resignation on 11 December 2004 with his Government assuming a caretaker role until the general election in February the next year, which was lost to José Sócrates.

Bagão Félix claimed there were but two options, blow the deficit target or relieve Caixa Geral’s pension fund of a billion euros. Félix admitted that his decision did not exactly go down well with Caixa Geral’s management: the then Chairman, Freitas do Amaral, referring to the move as a “confiscation” of funds by the State.

Bagão Félix admits that at the time the operation was considered a "bad decision for workers and pensioners.”

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