Warning for social insurance

Greece’s social insurance system is facing the prospect of serious deterioration due to a threatened exodus of working people into retirement next year, the head of the union of social insurance fund employees (POPOKP), Giorgos Koutroumanis, has warned. Speaking at the union’s annual conference, Koutroumanis said that the uncertain and rather gloomy prospects the retirement system is facing, and the government’s declaration that the issue of reforming it will have to be left open until after the next general elections, seem to be fueling a wave of retirements. «Although final 2005 figures are not yet available, there is a definite rise in the number in relation to 2004, which in some public sector funds amounts to as much as 70 percent,» he said. According to POPOKP, the gravest problems facing the social insurance system are: – The deteriorating ratio of working people to pensioners, which has fallen from about 2:3 in 1995 to 1:8 today. Contributions by employees and employers to the funds, among the highest in the EU, amount to just 60 percent of outlays. The rest is covered by levies and the government. – Deficits are growing. Of the 24 main pension funds, the 13 that cover 91 percent of working people and 94 percent of pensioners are facing financial problems of varying degrees. – The size of pensions remains small. Including the recently announced raises for 2006, the average main pension will be 588 euros, with 2.17 million pensioners receiving 475 euros a month. Forty-eight percent of all pensioners have worked less than 20 years. – It was calculated at the end of last year that evasion of social insurance contributions was 20 percent higher than in 2002. If this continues, the losses for all pension funds are projected to reach 4.5 billion euros and the number of uninsured 1.1 million. – The state continues to not meet its contribution obligations to the funds, with budget provisions being about 2 billion euros short. – Expenses for medicine dispensed to the insured rose 20-30 percent in 2005, depending on the fund. – Unemployment benefits for about 550,000 citizens cost about 2.2 billion euros annually – a major source of the problems. At the conference, Labor Minister Savvas Tsitouridis acknowledged problems and responsibilities, but ruled out increases in retirement ages and the freezing of pensions. He said the current system will be maintained but that everybody concerned had to participate in the dialogue, with a view to identifying the size of the problem and laying a basis for reform.