BoG comes to the rescue for pensions

The Labor Ministry had a very hard time finding the remaining 150 million euros needed by late on Friday afternoon for the payment of pensions to 1.2 million recipients insured with IKA. Fortunately, the Bank of Greece came to the rescue.

The drama started on Thursday, when the management of the Social Security Foundation (IKA) asked the ministry for additional funding to be able to pay its pensions on Monday.

Initially the solution appeared to come from a ministerial decision forcing the bank employees’ fund (ETAT) to lend its reserves to IKA. However, Alpha Bank, where the reserves are deposited, refused to disburse any amount without the prior approval of ETAT, forcing the ministry to look elsewhere for a solution.

Eventually the money required came from the Common Fund of central bank, albeit at a significant delay. The ministry had to make sure the pensions were in recipients’ bank accounts by Friday afternoon, so that they could be accessed via ATMs.

Up to late on Friday the IKA administration and the ministry insisted that the money would be at the banks on time.