New wave of uniform rules in its benefits EFKAannounces, speaking to newsit.gr, the Deputy Minister of Labor and Social Security Panos Tsakloglou.
Specifically, Panos Tsakloglou mentions that in addition to the uniform cash benefits regulation, which is in a mature phase, a few days ago corresponding groups were formed to draw up conclusions on the Rules for Inclusion in Insurance and Uniform Rules for Retirement, through EFKA.
At the same time, Mr. Tsakloglou emphasizes that the work of the working group on the Uniform Disability Regulation continues.
“We are therefore in a process of unifying rules, something necessary in order to ensure fairness among e-EFKA insured persons,” says the deputy minister.
Below is the entire interview with the Deputy Minister of Labor and Social Security Panos Tsakloglou:
According to the latest report of the KEAO, the debts to the funds amounted to 48.8 billion. euros in the third quarter of 2024. In fact, of these, 9.8 billion euros are characterized as debts with “very low collectability”. What are you considering doing with these de facto bad debts? In terms of debt collection, are you considering doing more to increase debt collection at EFKA, beyond the existing 24-installment permanent open arrangement or the responsive collection notices, along with their implementation?
Mr. Katsagani, while the data you quote is correct, it is important to emphasize that the majority of the debt comes from past years, before 2009, with a further increase during the period of the Economic Adjustment Programs and the health crisis. However, with the improvement of the economy in recent years, there is a decrease in both the number of new debtors and their debts. But while new principal is steadily declining, old debt continues to incur additional charges, giving the impression of a bloated total debt.
From 2010 until today, a series of measures have been taken to facilitate debtors in repaying their debts from insurance contributions, such as for example various adjustment programs, an increase in installments of the fixed adjustment and also retirement with debts to the e-EFKA. In addition, there is the possibility of subscribing to the out-of-court debt settlement mechanism that creates a framework for the settlement of debts of both natural and legal persons with bankruptcy capacity against their creditors. In addition, the Insurance Debt Collection Center (KEAO) and e-EFKA, in general, have taken targeted actions to improve collectability. Since 2019, the suspension of the use of electronic services has been implemented for debtors who do not pay contributions, while notifications are continuously sent for the settlement or repayment of debts. In this context, KEAO has managed to collect 12.7 billion. euros during the ten years of its operation.
However, I would like to emphasize that participation in social security is a mandatory and not a voluntary process. Distributive insurance systems such as the Greek one, i.e. systems in which current pensions are paid from the contributions of current employees, face many challenges due to the aging of the population. In this context, it is very important to establish a culture of compliance with the obligations of all insured persons towards the insurance funds as a necessary condition for the sustainability of the insurance system and the uninterrupted payment of pensions.
The provision that you brought to the Parliament foresees the increase of the Pensioner Solidarity Contribution (EAS) thresholds for the main pensions by the percentage of increase of the main pensions, in order to stop the phenomenon of the reduction of pensions that change the EAS scale after their increase. However, you did not foresee any regulation (eg reduction) for the EAS in the supplementary pensions. And this despite the fact that the said contributions are directed to the “piggy bank” of the auxiliary insurance branch of the EFKA (AKAGE), but by law it is prohibited to draw resources in favor of the auxiliary insurance branch of the EFKA in case of deficits. Are you considering any regulation in relation to this paradox (ie pensioners paying into a ‘piggy bank’ which cannot be used on their behalf)?
The social security system in our country operates with a distributive nature, based on the principle of intergenerational solidarity. This principle is a cornerstone of its sustainability, ensuring the support of both current and future generations. In the context of this philosophy, the Generation Solidarity Insurance Fund (AKAGE) was established. AKAGE operates as a reserve fund, with the aim of strengthening the stability of the pension system, especially in periods of great demographic pressure. Its role becomes particularly critical, given the challenges of the demographic aging of the population. AKAGE has already collected resources exceeding 17 billion. euro. These resources come mainly from the Pensioners’ Solidarity Contribution (EAS) to the main and auxiliary pensions, as well as from 4% of the annual total VAT revenue.
As far as the reform of the EAS is concerned, the recent provision submitted to the Parliament aims to solve a specific problem related to the main pensions. Specifically, it provides for the annual readjustment of the EAS scales with the pension increase rate, in order to avoid the reduction of pensions due to a transfer to a higher scale. On the contrary, in the supplementary pensions, which operate on the basis of the “notional capitalization” system, the way of calculating their change is different, and no corresponding problems requiring legislative intervention have been observed. For this reason, it was considered that it was not necessary to establish a corresponding regulation.
For many months now, the formulation of the defined investment product for the insured of the Subsidiary Capital Insurance Fund (TEKA) has been pending. When do you foresee bringing regulation for TEKA’s investment strategy and what will be its “content”?
It is the State’s responsibility to guarantee the institutional protection of the new Fund with a strict and functional supervision framework, which will ensure the interests of the insured, and we are working in this direction. Already last October, the Ministerial Decision was issued that regulates individual issues and technical details of the tripartite supervision of TEKA by the Ministry of Labor and Social Security, the National Actuarial Authority and the Capital Market Commission. In the immediate future, the institutional framework for the investment operation of the new Fund will be completed, so that TEKA can start investing its reserves following good international practices, transparently, with the best interests of the insured in mind based on the principle of prudent management and the development of the economy.
As of 2017, the formulation of uniform rules for EFKA non-pension benefits is pending. When will you bring such an institutional framework and what will be the general directions of changes in relation to the existing fragmented landscape?
In fact, with the establishment of e-EFKA as a single social security institution, dozens of former Funds that were governed by different Cash Benefit Regulations for proportionally the same contributions were brought under its umbrella. I should note that Cash Benefits mean pregnancy and childbirth allowance, sickness and accident allowance, funeral expenses and some other smaller benefits given on a case-by-case basis per former Fund. The need for new uniform rules is undeniable, so that all insured persons are treated equally without discrimination, regardless of the former Fund from which they come.
In the above context, in November of the previous year, a working group was set up to draw up a documented conclusion. This conclusion is complete, and for the first time we have in our hands costed alternative proposals. The aim is that the changes that will be made will have a fiscally neutral effect and we are currently at the stage of starting to draft a bill based on the proposals of the opinion, with the appropriate adjustments. Within the coming months, I believe that we will have the new institutional framework ready.
I should also note that in addition to the single regulation of cash benefits, which is in a mature phase, a few days ago corresponding groups were formed to draw up conclusions on Rules for Inclusion in Insurance and Uniform Rules for Retirement. At the same time, the work of the working group on the Uniform Disability Regulation continues. We are therefore in a process of unifying rules, something necessary in order to ensure fairness among e-EFKA insured persons.
We would like to dedicate our last question to a topic of macroeconomics, taking into account your status as a professor in the Department of International and European Economic Studies of the Athens University of Economics and Business. Do you believe that the observance of the new European Stability Pact (with the inflexible spending limits, etc.) which comes into force on January 1, 2025 with the pressures (tariffs, increase in defense costs for NATO) can go hand in hand at the European level, as well as at the Greek level etc.) that Donald Trump’s assumption of the US presidency is expected to exercise, or does the EU need to do something extra?
Undoubtedly, in many EU countries the intended increase in defense spending becomes more difficult with the adoption of the new rules of the European Stability Pact. This is not true in the case of our country, since our defense expenditures as a percentage of GDP are among the highest in the Alliance. A possible increase in tariffs on both sides of the Atlantic – because I assume that the EU will be forced to increase its tariffs too if President Trump goes ahead with the implementation of his pre-election announcements – will have a long-term negative impact on the welfare levels of both the US as for the EU, but it has very little to do with the rules of the Pact.
I think the EU’s problem is wider and is highlighted in both the Draghi Report and the Letta Report that preceded it. While the EU as a whole can be considered a major ‘player’ at the global level, the same is not true of the individual countries that make it up – even the most powerful of them. And the problem will worsen as time goes on due to the demographic aging of the EU population. Therefore, the promotion of European integration with policies analyzed in the above reports is of key importance for the position of the EU and its member states at the global level. And yes, most politicians at the European level realize that the existence of unified policies and their financing mechanisms – possibly with mutual concessions to reach an agreement – that will lead to further economic and political integration are necessary, but most of the recent election results in various countries are in the opposite direction and the integration process has essentially stalled. In the long run, this alone is favorable neither for the member states nor for the EU as a whole.