NEWS

Pension fund debt soars higher

Greece’s pension funds are owed 15 billion euros, Labor and Social Insurance Minister Andreas Loverdos said yesterday, admitting that the state will only be able to collect a small fraction of the outstanding amount this year. There are a total of some 800,000 debtors, Loverdos said, of which 450,000 are businesses, 250,000 are farmers and 100,000 are individuals who work second jobs. The minister admitted that the government is aiming to collect just 300 to 400 million euros of this amount by the end of the year. In other words, just 2 to 2.5 percent of the 15 billion euros will be settled, if everything goes according to plan. The state, municipalities and public companies are among those that owe the most to the pension funds but Loverdos said that a number of private companies are taking advantage of the fact that tax inspectors are very slow in checking who has paid their contributions. He said that authorities are aware of 850 companies that each owe more than 500,000 euros in unpaid social security payments. The minister suggested that the problem could get worse as a result of the economic crisis, which is forcing some companies to cut corners as far as pension contributions are concerned because they are having difficulty meeting their financial commitments. He called on banks to help out businesses that have financial difficulties by issuing them with guaranteed loans. Loverdos said companies that do not settle their social security debts face closure, adding that pension funds will need to be given between 300 and 750 million euros from the national budget in order to be able to pay out on all pensions. The size of the debt to the funds comes as a blow to the government, which only last month passed radical reforms to the country’s creaking pension system. The changes will affect anyone who wants to retire as of next year and include an increase in the retirement age to 65; women were able to retire at 60 previously. Greeks will also be expected to work a minimum of 40 years rather than the current limit of between 35 and 37 years. This change will be phased in over the next five years.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.