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Insurance funds in the red

20 June 2014 / 16:06:21  GRReporter
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Two billion euro is the amount of the 2014 deficits of the seven largest insurance funds, according to the data that the board of the Panhellenic Federation of Social Policy Organizations Staff presented at the beginning of its 30th congress yesterday. This amount does not include the discount due to the 3.9% reduction of contributions, nor the reduction in revenue due to the elimination of social resources.
 
The funds seem to have lost more than 20 billion euro over the past years. According to President of the Panhellenic Federation of Social Policy Organizations Staff Thanassis Kapotas the cuts and rising unemployment have led to a decrease in revenues of about 7 billion euro whereas the 20% reduction in wages has brought losses to the amount of 3 billion euro. In addition, the non-payment of contributions and the undeclared work are estimated at 8.5 billion euro whereas the reduced contributions and social resources have led to further losses of around 2.3 billion euro. On the other hand, according to the data on delayed retirement resolutions, the insurance funds seem to "hold" over 3 billion euro in the form of delayed pensions of insured persons and therefore have not yet recorded them in their accounts. If the 12 billion euro losses from the PSI are added to the amounts mentioned previously, the reported losses of the insurance funds will amount to over 32 billion euro. The largest insurance institute, IKA, struggles to secure funding for pensions to the amount 880 million euro each year, while at least 50% of uncollected debts, totalling around 8.05 billion euro, are actually bad.

Insurance Organization for the Self-Employed (OAEE)

The situation in the InsuranceOrganization for the Self-Employed (OAEE) is even worse, not because its deficit is expected to reach 740 million euro in 2014 but mainly because the increase in the deficit is accompanied by a 40% reduction in this year’s revenue. 370,000 out of 750,000 insured in OAEE as of 31 December 2013 did not pay social security contributions, the result of this being debts of the organization to the amount of 7.4 billion euro.
 
Trade unionists from the Panhellenic Federation of Social Policy Organizations Staff refer in alarm to the complete lack of planning in the National Organization for the Provision of Health Services to which insurance funds owe 571 million euro. Both the Panhellenic Federation of Social Policy Organizations Staff and the General Confederation of Craftsmen and Tradesmen, which gave a press conference about the wave of confiscations and the large number of uninsured, agree that the funds should require additional resources in addition to the contributions of the insured persons and state funding.

During the press conference, president of the General Confederation of Craftsmen and Tradesmen George Kavatas proposed that all arrears of OAEE, amounting to 5.9 billion euro,be capitalized and that the obligations for their payment by the insured at the end of their insured length of service be transferred with an option to "purchase" additional years of service. Taking into account the conclusions of a piece of research conducted by the institute for small businesses, George Kavatas added that a viable solution for the insurance fund and the market itself should necessarily provide for the following points:

• Free choice of insurance class, of minimum two years, in order to mobilize 50% of those insured in OAEE who have already left the system or are about to leave it because of financial problems. The seriousness of the problem is evidenced by the ratio of active insured persons and pensioners, which is 1:1.

Moreover, over the past five years, the contributions of those insured in OAEE have decreased by 450 million euro. It is estimated that the measure of the free choice of an insurance class can bring to the fund 600 million euro annually in proceeds.

• Special care for insured older persons who have reached the retirement age but owe over 20,000 euro, thus facing the risk of not receiving a pension. OAEE has requested a national pension to be paid to this category, equal to the amount that corresponds to their contributions paid up to date. This proposal is important because OAEE, unlike IKA, does not provide for early retirement and for the payment of a reduced pension respectively.

Tags: Insurance fundsDeficitsIKARetirement age
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