ECONOMY

Dues open hole in EFKA budget

dues-open-hole-in-efka-budget

The ministries of Finance and Labor are gravely concerned by the sixth adjustment of the 2019 budget for the Single Social Security Entity (EFKA), as the pension fund is swinging toward a deficit of 48.6 million euros, against an original projection for a surplus of 245 million euros.

The hole that this automatically creates in the primary result of the general government budget comes to 293.7 million euros, which is worrying the government.

The return of 120 million euros to freelance and self-employed professionals and farmers after the clearing of the 2017 contributions, the adjustment in the calculation for the solidarity levy and healthcare contributions after the change to pensions based on the Katrougalos law of 2016, and the drop in interest rates that reduced the yields of the fund that the Bank of Greece manages have all resulted in a considerable widening of the EFKA deficit.

The data are reversing the previous government’ claims regarding the course of EFKA’s finances, as the fund is showing a deficit, unlike previous revisions that raised the fund’s surplus from the original projection for 245.09 million to 261.33 million euros.

The new way that the contributions of freelancers and the self-employed are calculated, based on the previous year’s income, entails an increase in EFKA’s expenditure by 120 million euros that must be returned to workers who have paid too much in contributions.

In fact the sum of the returns due for 2018 will also lead to returns, amounting to 215 million euros net, but it is not yet clear whether this amount will be included in the the social security fund’s budget for this year.

The reduction in market interest rates is also seen resulting in the loss of 25 million euros in revenues. This is due to the impact of the decline in interest rates on the deposits that EFKA has in the fund managed by the central bank: Therefore the revenues from interest originally projected at 120 million euros will eventually amount to just 95 million.