The price social security funds will have to pay after the haircut

The financial leadership is working on alternative scenarios of cutbacks in order to safeguard pensions, in case the public funds suffer dramatic losses because of the upcoming haircut.

Some of the ways through which a solution is sought are a further tax deduction from wages and pensions, further lowering of supplementary pensions and liquidation of family assets starting with estates (amounting to 1.4 billion euros).

The cutbacks will come into effect only in the case of great need. For the moment, FinMin Evangelos Venizelos has promised to reinforce the funds.

The fact is, however, that the 50% haircut which is being discussed will be a knockout blow for the already problematic and financially insufficient funds. Most of today’s fund holdings are invested in bonds of the Greek state, which at the moment are at stake.

The situation is bleak, with some funds such as IKA being in a worse position than others.

As a matter of fact, the present burning issue is not the haircut itself but the lack of liquidity. The latter could prove that the government is unable to pay the pensions at a time when the Troika has prohibited extra state funding. Nevertheless, even if the leading figures decide to liquidize a bond, its value today would be decreased by up to 60%.