Euro changeover: wages, pensions and social benefits

Last update: 24.09.2008 06:00

Decree No. 251/2008 of the Ministry of Labour, Social Affairs and Family of the Slovak Republic lays down detailed rules applicable to dual display and conversion and rounding of prices, unit prices, payments and other values during the euro changeover. The decree introduces binding rules applicable to wages, salaries and other forms of remuneration for work, travel allowances, employment services, social security insurance and old-age pension saving schemes, social security benefits, social assistance benefits, subsistence benefits and other social support benefits, and social services.

What requires dual display
The dual display applies to wages and salaries, average hourly earnings or anticipated hourly earnings and average monthly earnings or anticipated monthly earnings, wage or salary compensations, compensations for inactive part of standby duty outside the workplace, standby duty compensations for the performance of emergency measures, income compensations for employee’s temporary incapacity for work, remuneration for the work performed based on agreements on the work performed outside the employment contract, travel allowances, contributions and payments under the employment services which include a contribution provided based on an agreement or submitted application, remuneration provided under a contract, repayment of funds provided based on an agreement, compensation for a portion of travel expenses, levies for a failure to keep the mandatory share of disabled employees, including overpayments and underpayments, and to other areas within the remit of the Ministry of Labour, Social Affairs and Family of the Slovak Republic.

Social security benefits
These include social security benefits comprising sickness insurance benefits, pension benefits, injury benefits, guarantee insurance benefits, unemployment benefits, and social security premiums which comprise sickness insurance premium, old-age pension premium, disability insurance premium, injury insurance premium, guarantee insurance premium, unemployment insurance premium, reserve solidarity fund premium, contributions to old-age pension saving scheme, fines and penalties in the field of social security and old-age pension saving scheme.

State social benefits, subsistence benefits, etc.
The Labour Ministry decree also specifies the rules for the conversion and rounding of the subsistence minimum as a socially accepted lowest limit of income of a natural person below which the persons find themselves in material need.In addition, this include also state social benefits such as child benefits and a bonus to child benefits, parental allowances, child birth benefits and a bonus to child birth benefits, allowances for the birth of triplets or more, allowances for the birth of two sets of twins within two years.  It further includes subsistence benefits and bonuses to subsistence benefits and other social allowances such as substitute child maintenance, allowances to support substitute child care, meal subsidies, school equipment subsidies, subsidies for incentive contribution and subsidy for the performance of a special beneficiary, funeral benefits, social assistance payments such as financial allowances for the compensation of social consequences of serious disability, etc.

Before the euro changeover
During the dual display period before the euro changeover date, wages, salaries and other payments rendered in Slovak korunas in connection with the performance of work will also be displayed in euros on a payroll slip. Converted using the conversion rate, the payments are rounded to the nearest euro cent; where the part of the final amount after the decimal point is less than 0.5 euro cent, the result is rounded down to the nearest euro cent, where the part of the final amount after the decimal point is equal to or higher than 0.5 euro cent, the result is rounded up to the nearest euro cent.

After the euro changeover
During the dual display period after the euro changeover date, wages, salaries and other payments rendered in euro in connection with the performance of work will also be displayed in Slovak korunas on a payroll slip. Converted using the conversion rate, the payments are rounded to the whole Slovak korunas; where the part of the final amount after the decimal point is less than SKK0.5, the result is rounded down to the nearest whole koruna, where the part of the final amount after the decimal point is equal to or higher than SKK0.5, the result is rounded up to the nearest whole koruna.

Wages and salaries
Wages, salaries or other payments rendered in Slovak korunas for the performance of work in the month immediately preceding the euro changeover date, which should be paid out or credited to a specified bank account in euros after the euro changeover date, will be converted using the conversion rate and rounded up to the nearest euro cent. The same applies to wages, salaries and other payments rendered in connection with the performance of work if the claim to such a payment in Slovak korunas arose in any other time period prior to the euro changeover date.

Average earnings
The average hourly earnings calculated pursuant to a separate regulation from the wages paid in Slovak korunas in the last quarter prior to the introduction of the euro currency will be converted using the conversion rate and rounded to four decimal places.  Average monthly earnings in euro will be calculated as the product of the average hourly earnings and the average number of working hours per month in the given year based on the employee’s weekly working hours. The resulting sum is rounded up to the nearest euro cent. If, during the decisive period, the wage or its portion will be paid for a time period longer than a calendar quarter, a pro rata portion of the wage for the calendar year will be converted using the conversion rate and rounded up to the nearest euro cent.
The Social Insurance Agency has prepared information for the pension scheme beneficiaries about the euro changeover and rounding methods. The pensions awarded in Slovak korunas will be converted using the 30.1260 SKK/EUR rate. The pensions will be converted using the same conversion rate as applies to the conversion of any other monetary values denominated in the Slovak currency – i.e. prices of food, services, energy, etc. Though the nominal value of the pensions will decrease due to the conversion, their real value will remain unchanged because all other financial operations will also be converted from korunas to euros.

Rounding of pensions
Pension payments and other expenditures from the general government budget will always be rounded up for the benefit of beneficiaries. Such payments will be rounded up to the nearest 10 euro cents. The aforementioned rounding method will not apply where the entitlement to the pension arose before 1 January 2009 but beneficiaries failed to collect it. Such pensions will be rounded up to the nearest euro cent because they constitute a budgetary expenditure of the Social Insurance Agency which is a general government entity. The payments will be rounded up to the nearest euro cent even when the pension is paid to the beneficiary via a single postal order if it is an aggregated pension payment for several calendar months.

Pensions after the euro changeover
If a decision on the entitlement to pension is made after the euro changeover and the pension is awarded retroactively as of a date prior to 1 January 2009, the amount of the pension will be specified in Slovak korunas. The amount of the pension to which a beneficiary is entitled for the period from the award of the pension to 31 December 2008 (a difference payment up to the euro changeover date) converted using the official conversion rate will be rounded up to the nearest euro cent. The amount of the pension will be rounded to 10 euro cents as of 1 January 2009 and the difference payment for the period from the introduction of euro will be calculated from the amount of the pension denominated in euros.

Dual display
Pension beneficiaries will be informed about the amount of the pension payment they receive through dual display in the Slovak currency and in euros. Also, the 30.1260 SKK/EUR conversion rate will be displayed. The Social Insurance Agency will introduce the dual display of pensions one month after the conversion rate has been fixed. The dual display of pensions will survive until the end of 2009.  Until 31 December 2008, the amount of the pension displayed in euro will be rounded up to the nearest 10 euro cents. From 1 January 2009, the pension amount will be expressed in euro and its value displayed in Slovak korunas will be rounded up to the whole 1 koruna.

Pension payment dates in January 2009
 Delays in pension payments to be effected on the first due dates in January 2009 (i.e. on 2nd, 4th and 6th January) will not be caused by the euro changeover. But as 4th and 6th January 2009 are non-business days, the payment dates are postponed to 5th and 7th January 2009. If pensioners receive their pensions through a wire transfer to a bank account, the first due date in January 2009 (i.e. 2nd January) will be shifted due to the euro changeover to 5th January 2009.