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Greek Pension Funds in Difficult Situation

Greek pension funds go from bad to worst. No wonder that with an unemployment galloping at 16% -and rising tendency- you will hardly find labourers pay their contributions. Furthermore the increased unemployment benefits paid out to several hundred thousands jobless do not make things better.

One grave mistake of the Greek social policy is that there social insurance, pension and medical care are under a single umbrella, and there is no private pension fund. Time for radical reforms, guys! I wonder if there is such any provision at all on the

No wonder that Prime Minister George Papandreou wants to exclude the Greek bonds currently in the hands of pension funds from a possible haircut or selective default.

Here is an article with the latest budget data and the economic situation of the Greek pension funds.

Budget Execution Reveals €4.9b Gap

 The largest pension funds in Greece are in very difficult position as they have absorbed the biggest part of annual appropriations in the budget in the January-June period, while there is a gap of 4,953 million Euros in the budget execution for the same period.

According to the data available for the execution of the State Budget for the six months January – June 2011, on a fiscal basis, the deficit amounts to 12,747 million Euros compared to the target of 10,374 million Euros set in the 2011 Budget. During the same period in 2010, the State Budget deficit amounted to 9,997 million Euros.

It is noted that the current revenue shortfall is expected to be tackled during the next six months, based on the anticipated performance of the tax regulations included in the implementing Law of the Medium Term Financial Strategy 2011-2015.

Ordinary budget expenditures increased by 8.8% compared to the same period of 2010. This increase is mainly due to:

the increased interest expenditures by 1,277 million Euros,

the increased grants to Social Security Funds as a result of the reduced receipts from social security contributions by 1,280 million euros,

to the Employment Agency (OAED) for the payment of unemployment benefits by 348 million Euros and

to hospitals by 935 million euros (506 million euros for the year’s 2011 procurements expenditure and 429 million euros for the settlement of past years obligations from procurement).

In particular, primary expenditures increased by 4.5% or 1,111 million Euros during the same period, mainly due to the increased grants to Social Security Funds (primary to the Agricultural Insurance Organization – OGA by 371 million Euros and to the Wage Earners Fund – IKA by 867 million Euros), to OAED by 348 million Euros and to hospitals by 506 million Euros.

Read the whole article HERE

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