Pension spending still high
EFKA data show considerable improvement, but social security expenditure remains immense
The Single Social Security Entity (EFKA) has entered a trajectory of fiscal balance and actuarial sustainability.
That is the view of both the European Commission in its recent report on the third evaluation after enhanced supervision, and the Organization for Economic Cooperation and Development (OECD) in its report on pensions.
In this context, the Labor Ministry and EFKA seem to be focusing their efforts for 2024 on further limiting the pending pension applications, mainly those concerning supplementary and retirement lump-sums, as well as on the digital transformation of the organization.
In detail, in its recent report, the Commission finds that the projected reduction in the cost of pensions will play a large part in the required fiscal effort to stabilize the debt and achieve, in the long term, its limitation to 60% of GDP.
Brussels estimates that as long as the statutory reforms are implemented, the goal will be achieved. The Commission reports that the reduction in aging-related spending contributes two percentage points to the debt reduction effort, mainly due to the cut in public spending on pensions (-2.1 percentage points), which is only partially offset by the projected increase in healthcare spending (0.7 percentage points); also the latest OECD report, although it states that for the time being Greece still spends a lot, namely 15.7% of GDP on pensions compared to 8.9% of GDP which is the average pension expenditure in the OECD and 8.5% in the member-countries of the European Union, predicts that the country is the only one that will achieve a significant reduction in the long term, apparently due to the maturation of the Katrougalos law.
Therefore, the expenditure will decrease, although it will remain high, until 2035 (13.7% against 9.8% in the OECD and 9.4% in the EU), while it will fall to 12% of GDP in 2060, due to maturity of all previous pension interventions, when in the EU it will be at 13.9% of GDP and in the OECD at 10.3%.
The positive progress of EFKA is also reflected in its budget forecast for 2024, for a surplus of 864 million euros.
