According to the new bailout agreement, the unification of all supplementary pension funds that will come into effect in September will also mean that pension cuts are imminent due to the ‘zero deficit’ clause. The Deputy Minister of Social Security Pavlos Haikalis signed the relevant decree which affects about 120,000 pensioners on Tuesday.
The ‘zero deficit’ clause, which retroactively comes into effect as of the 1st of January 2015, means that pensions are funded exclusively by employee contributions. This means that if the supplementary funds cannot cover the cost of the pensions, they will have to carry out cuts accordingly.
At present the deficit at the unified supplementary pension fund ETEA is estimated to be about 350 million euros, which is about 14% of its annual expenditure on pensions. The other 11 pension funds that are to join ETEA have a deficit of about 100 million euros. This means that after October these supplementary pensions may be slashed by 14%.
Furthermore, all supplementary pensions that are paid out at the end of August will be reduced by 6% in order to cover pensioner healthcare costs.