ECONOMY

Pension fund revenues crumble

pension-fund-revenues-crumble

Social security funds are in a dire situation as their revenues have declined by 2.5 billion euros within just one year, while showing a primary deficit of 598 million euros in the year to end-August against a primary surplus of 206 million a year earlier. At the same time, the state’s expired debts to third parties grew to 5.9 billion euros in August, from 3.7 billion at the start of the year.

According to the data supplied by the Finance Ministry, the general government budget posted a primary surplus of 2.6 billion euros in the January-August period, against a primary surplus of 2.4 billion a year earlier. However, this result is purely the result of the government’s decision to halt payments in a bid to contain its deficits, while the course of the various general government entities has been negative.

The reduction in the pension funds’ revenues by 2.5 billion euros year-on-year is mainly due to the 640-million-euro drop in social security contributions, as well as the 1.5-billion-euro decrease in support from the state budget. The funds were forced to curtail their expenditure considerably, handing out 1.6 billion euros less, of which 707 million euros concerned cuts to social benefits.

Local authorities saw their robust primary surplus of 282 million euros in the first eight months of last year shrink to just 74 million this year. Likewise, state corporations recorded a surplus of 537 million euros this year against 1 billion euros in 2014.

The impact of the government’s payment halt is such that it is on course to double the state’s expired debts to third parties within just one year. Within eight months they have grown by 2.2 billion euros to reach 5.9 billion, and in early October they are estimated to have climbed to 7 billion – from 3.7 billion in early January.

Alternate Finance Minister Giorgos Houliarakis stated on Tuesday that if the required prior actions are voted by Parliament and the review of the bailout program is successfully completed for the planned tranches to be disbursed, the state will this year pay off debts of 3.1 billion euros and another 3.9 billion euros in 2016.