IKA social security fund running low on cash, causing worry

Greece’s main social security fund, IKA, does not have enough money to pay pensions in October and will be borrowing 150 million euros in order to cover its financial commitments to retirees next month, Kathimerini has discovered.

IKA will accept a five-day loan from the State General Accounting Office to tide it over but the indications are that its cashflow problems run much deeper and that the fund is facing further shortfalls.

The organization had hoped that a 48-month payment plan for companies who had social security contribution arrears would help IKA’s predicament. The scheme was introduced earlier this year following lengthy discussions with the troika but has had limited impact. Fewer than 6,900 of tens of thousands of firms that owe money to the fund have come forward to agree a payment plan to pay off their debts.

Despite the greater influx of tourists this summer and the option of a payment plan for trouble companies, IKA only saw its revenues increase by 0.1 percent from July to August. In July, the fund only brought in 22 million euros from companies with which it had reached a settlement. Twelve months earlier, IKA collected 132 million euros from firms that were late payers.

Greek officials are to discuss these problems with the troika, which is due to conduct a new review of the country’s fiscal adjustment program this month. The troika has asked for social security contributions to be reduced by 3.9 percentage points by 2016 but there is concern in Athens that this could leave the funds even more strapped for cash.

The liquidity problems at IKA could also have implications for the funding gap in the Greek program. At Friday’s Eurogroup meeting in Lithuania, Dutch Finance Minister Jeroen Dijsselbloem said that the issue of raising new funding for Greece from next year would be discussed in November or December.

European Economic and Monetary Affairs Commissioner Olli Rehn said it was “premature” to discuss the size of Greece’s funding gap before the troika completes its review.

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