Greece’s biggest social security fund to borrow €150m to pay October pensions

Posted by in Economy, Society

It comes as expected: high unemployment rates ruin Greece’s social security funds. Yesterday I read that the 1,403,698 people without work (stand: June 2013) deprive the social security funds of 500 million euro in social security contributions on a monthly basis. Now the country’s biggest social security fund IKA – the fund for employees mainly in private sector – will allegedly have to borrow 150 million euro in order to be able to pay pensions in October.

According to an exclusive story by daily Kathimerini, “IKA will accept a five-day loan from the State General Accounting Office” to tide it over but the indications are that its cashflow problems run much deeper and that the fund is facing further shortfalls.

“The organization had hoped that a 48-month payment plan for companies who had social security contribution arrears would help IKA’s predicament. The scheme was introduced earlier this year following lengthy discussions with the troika but has had limited impact. Fewer than 6,900 of tens of thousands of firms that owe money to the fund have come forward to agree a payment plan to pay off their debts.

Despite the greater influx of tourists this summer and the option of a payment plan for trouble companies, IKA only saw its revenues increase by 0.1 percent from July to August.

In July, the fund only brought in 22 million euros from companies with which it had reached a settlement. Twelve months earlier, IKA collected 132 million euros from firms that were late payers.”

At the same time, uninsured work flourishes as employees -many of them part-timers – prefer to work without insurance and spend every cent of salaries between 250-300 euro for themselves and their families than to go home with peanuts due to high social security contributions and taxes. Not that this system does not meet the expectations’ of employers…