32 bln shortfall

€

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