Trends pose bleak future for social security funds
An increasing number of pensioners that must be supported by a shrinking number of working people, pension funds with many members but few assets, and others with few members and plenty of assets are prominent characteristics of the Greek social insurance system, according to a study of the Panhellenic Federation of Insurance Fund Staff (POPOKP), based on data of the Social Budget released last month. According to the study, the number of pensioners rose 26 percent to 2,154,937 from 1,713,053 in 1992. During the same period, the number of people at work fell 5 percent to 3,838,614. As a result, the ratio of working people to pensioners has fallen from 2.36 to 1.76. POPOKP says that if the trend is not reversed within 10 years, the ratio is bound to fall to 1.5, leading the social insurance system to a slow but unavoidable death. During the 1992-2002 period, pension fund revenue rose 232 percent and outlays 237 percent. However, the balance of contributions in the tripartite system has changed to the detriment of working people: They now pay 245 percent more while employers pay only 189 percent more, POPOKP says. The government’s contribution – derived from taxes – has risen 289 percent. The value of pension fund assets has risen from 3.2 million euros in 1992 to 16.6 million in 2002, but POPOKP says that it is not possible to arrive at an accurate estimate of the performance achieved. This is due to the fact that it is not just the value of the shares which the funds hold that has risen, but also their number. «A safe evaluation of the results of the asset management of funds requires detailed analysis of data which have not been provided to date, regarding purchase date and price, the size of dividends that have been distributed and the prices at which shares were sold. POPOKP points out that during the 10 years, pension funds as a whole did not manage to form adequate reserves, «which proves the mainly redistributory function of the system.» In the event of the extreme hypothetical case of revenues drying up completely, the assets of the entire social insurance system would suffice to meet pension payments for only six months. This estimate, however, is based on averages. In practice the big funds have few assets for each insured person, while for others the situation is the reverse. Indicatively, the country’s two largest funds, the Social Security Foundation (IKA) and the fund for the self-employed (TEBE) respectively have assets of 564 and 546 euros for each of their insured. By contrast, the fund of ETBA bank, acquired by Piraeus Bank earlier this year, has assets worth 394,472 euros for each of its members, the Newspaper Distributors and Vendors Fund assets of 112,694 euros for each person insured, and the Ethniki General Insurance fund assets of 108,455 euros for each member.
