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Financial catastrophe for insurance funds

20 April 2013 / 16:04:39  GRReporter
1863 reads

According to information of the management of the Panhellenic Federation of Organisations of Social Policy at the 29th Congress in Athens, estimated losses of insurance funds and health insurance funds amount to 2.5 million euro and 1.5 million euro, respectively. Non-payment of contributions has already caused losses amounting to 6.5 billion euro to the system, funds’ property has decreased by 12 billion euro, vacancies are 40%, and it takes 12 months to 3 years for the issuance of a decision on a pension.

As for the health insurance fund IKA, representatives of employees in insurance funds stated that every month the organisation struggles to provide pensions and reiterated that even in the first two months of the year there was a 14% delay in revenues compared to 2012, and budget projections included only 7%. Furthermore, IKA needs 800 million euro per month for pensions alone, while the number of retirees is constantly increasing, and, each year, 145,000 new applications for retirement are submitted. According to these calculations, today, IKA’s losses caused by working without insurance are approximately 36% and total losses for the insurance system amount to 6.5 billion euro.

Representatives of the Federation attributed many of the problems to reduced wages and lay-offs, which resulted in losses for IKA amounting to 1.5 billion euro more in 2013. Liabilities of active companies amount to 8 billion euro, and of non-active ones - 4.5 billion euro.

The situation is the same for the Freelancers’ Insurance Company. According to information, from a total of 774,000 insured people in 2012, 380,000 did not pay contributions and liabilities reached 5.9 billion euro, while in 2011 they amounted to 3 billion euro. In addition, 196,000 insured people stopped paying insurance in cash, which resulted in liabilities amounting to 1.5 billion euro, and approximately 35,000 stopped working in 2012. One out of two freelancers does not pay their contributions and, as a result, unpaid contributions amount to 7.4 billion euro compared to 3.5 billion euro in 2009. Reductions in revenues from contributions have surpassed 30% and the Fund’s shortage of cash will amount to 830 million euro.

Representatives of employees in the sector also claim that the proposal for the cancellation of the contribution on companies’ turnover, which is included in the 2013 budget, is also causing a problem.

As for the Agricultural Insurance Organisation, total liabilities amounted to approximately 730 million euro by 31 December 2012 and delayed payments for 2012 were 508 million euro. Currently, the Organisation insures 624,970 people and 1,149 active companies. The fund also covers 624,934 old-age pensioners - Greeks and 60 foreigners. In addition, it also covers 112,218 disadvantaged pensioners - Greek nationals and 98 foreigners, 5,249 uninsured Greeks and 1,834 foreigners. Moreover, it also covers 16,366 people with many children.

The percentage of insured people who pay their insurance contributions regularly and on time is 50.17% compared to 58% in 2012, that of those are late with their payments is 46.18% versus 36% in 2012. In this situation, it is believed that there will be a further reduction in pensions, starting with auxiliary pensions, and a definition of general terms and conditions within the new Common Fund for Ancillary Insurance that will cover the public and private sector with 2.5 million working people and 1.025 million retired.

Employees in the insurance sector declared themselves against professional funds and internal distribution of the system’s finances as well as "for" the public common ancillary insurance. They argued that forced reductions in the four funds, which were transformed into professional funds, ranged from 15% to 40%. They gave the Food Retailers’ Insurance Fund as an example, where, in April, there was a 30% decrease for amounts over 100 euro. As for bonuses, there will be further reductions of on average 20% as of 2014 (they have now been reduced by 2% to 83% in various funds).

Tags: insurance funds IKA pensions contributions shortages
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