Pen­sion funds re­sort to loans

Public in­sur­ance in­sti­tu­tions forced to bor­row to cover pay­ment re­quire­ments as rev­enues dry up

Kathimerini English - - Front Page - ROULA SALOUROU

Greece’s state in­sur­ance funds are re­sort­ing to ex­ter­nal loans to cover their needs as fears grow that the mea­sures of the third bailout will not be enough to cover the rest of 2015’s liq­uid­ity needs.

The Uni­fied Fund for the Self-Em­ployed (ETAA) re­ceived fund­ing from the Gen­er­a­tional Sol­i­dar­ity In­sur­ance Fund (AKAGE) to cover its le­gal and no­tary work­ers’ branch. A sim­i­lar ap­pli­ca­tion for 180 mil­lion eu­ros has been ap­proved by the board of the coun­try’s big­gest in­sur­ance fund, the So­cial In­sur­ance In­sti­tute (IKA).

A min­is­te­rial de­ci­sion by La­bor Min­is­ter Gior­gos Ka­trouga­los and Al­ter­nate Fi­nance Min­is­ter Dim­itris Mar­das fore­sees eco­nomic as­sis­tance to the tune of 20 mil­lion eu­ros from AKAGE to ETAA to cover part of the lat­ter’s deficit.

The prob­lems within ETAA’s no­tary di­vi­sion are well-known, with the fund re­cently hav­ing to liqui- date some of its as­sets at loss to cover its needs.

The So­cial In­sur­ance In­sti­tute also took a short-term loan of 110 mil­lion eu­ros in Au­gust to pay Septem­ber’s pen­sions. The de­ci­sion means that 70 mil­lion eu­ros of the loan will be taken by IKA’s Public In­sur­ance Fund and the re­main­ing 40 mil­lion eu­ros by its Mu­nic­i­pal In­sur­ance Fund.

In July, IKA’s rev­enues in­creased to 1.1 bil­lion eu­ros, up from 900 mil­lion eu­ros in June as many were wor- ried about a hair­cut on de­posits and paid their ar­rears to the state. The same can­not be said for Au­gust.

The deficit of AKAGE is ex­pected to grow due to the dra­matic in­crease in un­em­ploy­ment, po­lit­i­cal and eco­nomic un­cer­tainty, cap­i­tal con­trols, the mea­sures of the third mem­o­ran­dum and the early elec­tions, which are ex­pected to im­pact on the rev­enues of in­sur­ance funds this au­tumn.

Com­pared to June 2014, when the state in­sur­ance funds recorded a sur­plus of 407 mil­lion eu­ros, a deficit of 1.4 bil­lion eu­ros has ap­peared within the space of one year.

From the mea­sures in the third mem­o­ran­dum ex­pected to save the state money in 2015, lim­ited funds will be gen­er­ated for pay­ing pen­sions. For ex­am­ple, re­duc­ing early re­tire­ment will gen­er­ate just 3 mil­lion eu­ros in 2015 af­ter pay­ing out the min­i­mum pen­sion.

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