Single pension fund appears doomed

Single pension fund appears doomed

The planned Single Social Security Entity (EFKA), which will include all the existing funds, appears doomed to failure before it even gets off the drawing board, as the mammoth fund’s draft budget looks set to post a huge deficit from its first year of operations.

The fund to start operating from January 1, catering to 3.5 million workers and 2.6 million pensioners, will show a deficit of 2.9 billion euros for 2017 as a whole, which will drop to the far-from-negligible 1.1 billion after additional cash injections from the state budget to the tune of more than 1.7 billion euros. For next, year the Labor Ministry and the management of EFKA have also factored in at least 350 million euros to come from the Social Security Fund for the Solidarity of Generations (AKAGE).

Although this is only a first draft of the EKFA budget, the data included are generating tension between officials at the ministry and the social security funds, and clearly reflect the dreadful liquidity conditions of the funds to be incorporated in the new entity, turning it into a deficit bucket. Of the eight funds to be merged into EFKA, only three are expected to show surpluses next year: the farmers’ fund (OGA, 9.5 million euros), the seamen’s fund (NAT, 176.4 million) and the fund for bank and utility company employees (TAYTEKO, 6.7 million euros).

The biggest deficit belongs to the largest fund, the Social Security Foundation (IKA), which is expected to post a deficit of 1.7 billion euros in 2017. For this year, it is quite striking that against an original estimate for a deficit of 2.1 billion euros, the official estimate is now for a deficit of just 819.04 million euros.

The situation is particularly serious at the pension fund for the self-employed professionals (OAEE): The draft budget of EFKA sees the OAEE deficit exceeding 1 billion euros in 2017, up from a projected deficit of 459.2 million euros this year.

The sum of the revenues of the new entity is estimated at 38 billion euros and its spending at 39.1 billion for 2017. State budget funding is calculated to come to 14.95 billion euros.

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