32 bln short­fall

Financial Mirror (Cyprus) - - FRONT PAGE -

the cu­mu­la­tive ar­rears’ stock has risen to 5.9 bln. In ad­di­tion, the clos­ing of firms re­sulted in 196,000 in­sured per­sons stop pay­ing their con­tri­bu­tions in­creas­ing the stock of un­paid con­tri­bu­tions by a fur­ther 1.5 bln eu­ros.

The uni­fied fund for aux­il­iary pen­sions (ETEA) fol­lows with a deficit of 274 mln eu­ros, while the the Agri­cul­tural In­sur­ance Or­gan­i­sa­tion (OGA) is es­ti­mated to have a short­fall of 181 mln.

The break­down of the 3.1 bln eu­ros re­lated to the de­lay in pay­ments to new pen­sion­ers shows that 1.7 bln stems from un­paid pen­sions, 1 bln from lump-sums and 450 mln from un­paid sup­ple­men­tary pen­sions.

In­cluded in the pen­sion fund loss of 32 bln eu­ros is the amount of 12 bln lost in the 2012 hair­cut on Greek govern­ment bonds (PSI) held by the pen­sion funds.

With re­gards to the PSI, a re­cent Bank of Greece pub­li­ca­tion showed that the losses suf­fered by pen­sion funds and other state­con­trolled or­gan­i­sa­tions amounted to 16.2 bln. Nev­er­the­less, this bur­den did not re­sult in a sim­i­lar re­duc­tion in the pub­lic debt stock - as ini­tially ex­pected - since it was per­ceived as in­tra-govern­ment debt.

The lat­est Euro­pean Com­mis­sion and In­ter­na­tional Mon­e­tary Fund re­ports on Greece noted that a sig­nif­i­cant short­fall was ex­pe­ri­enced in so­cial se­cu­rity con­tri­bu­tions (SSCs) in the first half of 2013. Since 2013, the troika re­ports have ac­knowl­edged that the Greek au­thor­i­ties have im­ple­mented a se­ries of mea­sures to im­prove so­cial se­cu­rity ad­min­is­tra­tion and boost collection of SSCs.

As a re­sult, the con­tri­bu­tion collection is now grow­ing faster than wages, re­vers­ing the trend of pre­vi­ous years. In ad­di­tion, monthly debt collection has in­creased by 50%.

Two of the twelve prior ac­tions de­manded by the eu­ro­zone for the dis­burse­ment of the next two bailout sub-tranches of 1 bln each are re­lated to the pen­sion sys­tem.

The first re­quires an ac­tion plan for the in­te­gra­tion of so­cial se­cu­rity debt collection with the main tax ad­min­is­tra­tion. The sec­ond mile­stone in­volves the adop­tion of the nec­es­sary leg­is­la­tion to merge into ETEA all the pub­lic sec­tor sup­ple­men­tary pen­sion funds. This is re­port­edly an­tic­i­pated to re­sult in a fur­ther weighted aver­age cut in aux­il­iary pen­sions by 5.2%.

The Greek govern­ment is also re­quired to

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