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Memorandum of Understanding on Specific Economic Policy Conditionality178in an actuarially neutral way with pro-rata calculations starting January 1, 2014. The fiscalsustainability factor will be applied to all supplementary funds integrated into ETEA from1 st July 2014 to eliminate any deficit.5. Starting January 1, 2015, all supplementary pension funds will only be financed by owncontributions. For a limited number of funds that technically cannot be merged into ETEAat this stage, the same rules as outlined in the previous paragraph will be applied from 1 stJanuary 2015.6. On lump-sum pensions, the reform implementation has already started (effective sinceJanuary 1, 2014), eliminating the deficits in these funds. All remaining funds that fall underthe ESA95 definition of General Government will be incorporated under law 4052/2012,effective from 1 st January 2015.7. Starting 1 st January 2015, all lump-sum funds will only be financed by own contributions.8. The Government will undertake a review of the social security system by May 2014 thatwill:i. Make proposals to further consolidate social security funds (SSFs) and integrate theirback-office functions and IT systems.ii.iii.iv.Provide a comprehensive analysis of the contribution and benefit structures andtiming of payment, and to widen the contribution base for SSFs.Clarify and identify the rules of operation fund by fund, as a first step beforeharmonizing them.Make proposals to enable pension portability between SSFs to facilitate mobilityacross jobs, occupations, and sectors.v. Through a detailed accounting exercise covering each individual SSF, assess theextent that spending on social assistance matches government funding to SSFs;examine SSFs financing through nuisance taxes; and benchmark the managementand other overhead costs of individual SSFs.vi.Evaluate means to strengthen the link between contributions and benefits.9. The Government will follow up to the above review, after consultation with EC/ECB/IMFstaff, to make proposals toward achieving consolidation of SSFs, and to harmonizecontribution payment and benefit rules by June 2014:i. To further consolidate SSFs, integrate back-office functions and IT system,harmonise rules of operation, and improve pension portability (June 2014).ii.To make progress towards constructing a central register of contributors anddeveloping a unified registration procedure in line with the roadmap to integratesocial security contribution collection with tax administration revenue collectionservices.10. The Government will present a wide-ranging package for pensions (September 2014). Thepackage will take account of the results of an actuarial review:i. Policies to widen the base of SSFs, including through elimination of unjustifiedexemptions by 1 January 2015.ii.iii.Policies to ensure the full separation of social insurance functions from the socialassistance functions of SSFs, with social assistance functions funded by general taxrevenues.Policies for a future pension-funding system that will safeguard the overallsustainability, actuarial fairness of the pension system to be implemented from 1January 2015. The proposed system should increase incentives for labour marketparticipation and improve incentives for making contributions through establishing a
Memorandum of Understanding on Specific Economic Policy Conditionalityiv.strong link between current contributions and future pension entitlements (e.g.,through an electronic registry)Policies to contain pension spending to ensure short- to medium-term compatibilitywith the MTFS targets by recalibrating pension system parameters.11. The Government will adopt the package for pensions by October 2014.2.8.2. Improving CollectionThe revenue functions of Social Security (registration, filing, payment, audit/control, amicable andenforced collection) are currently scattered across the different Social Security Funds, leading to biginefficiencies. The low level of current-year payment compliance in the major Social Security Fundsas well as the continuous increase of arrears [cast a doubt on the short-term viability of the system.An integration of the SSF revenue function into the tax administration is the best way forward, as itcan enable massive economies of scale and efficiency gains, both for the administration and for thetaxpayers / contribution payers. However, this can be only a long-term goal, given the fragmentednature of the SSF system (both in institutional terms and in terms of contribution rules applicable toeach individual SSF). Hence, in the short to medium term, addressing this challenge requires a multiprongedapproach to:- Strengthen the operations and progressively enlarge the role of the recently established jointcollection centre for Social Security (KEAO), with the aim of gradually positioning it as the collectionenforcement arm for all collectible overdue contributions to the 4 SSFs party to KEAO (IKA-ETAM,OAEE, OGA, ETAA)- Implement short-term revenue measures, mostly based on better reconciliation of notifications /declarations and effective payments and on better access to tax administration information;- Reinforce the inspection and audit function, especially within IKA-ETAM;- Pave the way in collaboration with the Ministry of Finance towards integration of revenue collectionwithin the tax administration.To work towards the integration of social security collection, the Authorities:1. Establish a working group to prepare the formal framework for exchange of assetinformation from the tax administration to KEAO (April 2014).2. Adopt the formal framework for exchange of asset information from the tax administrationto KEAO (April 2014).3. Announce a strategy for the integration of SSC payment and collection into taxadministration by July 2017 (April 2014).4. Assign the piloting of the project to a group of full-time staff (April 2014).5. Put in place a MOLSSW task force to commence preparations for integration by preparingthe business case, unifying the payer register and legal harmonization of the contributionbase across the funds (April 2014).6. Establish a joint working group (MoL-SS Funds-Revenue administration) to follow up theintegration within tax administration work (April 2014).7. Include in the comprehensive review of the social security system a review of theweaknesses in SSC collection, including enforcement (April 2014).8. Adopt a joint Ministry of Finance/Ministry of Labour plan of action for integration to taxadministration with the following milestones (May 2014):i. Complete the business case for integration of filing, payment and collection(September 2014).179
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OUTLINE OF THE REPORTEXECUTIVE SUMM
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LIST OF GRAPHSGraph 1. Economic cli
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ACKNOWLEDGEMENTSThe report was prep
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European CommissionThe Economic Adj
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1. INTRODUCTION1. INTRODUCTION1. Th
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2. MACROECONOMIC AND FINANCIAL DEVE
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2. Macroeconomic and financial deve
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Chart 3Graph 2.3. Exports of goods
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Chart 18Graph 13.1. Distance to Fro
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4. DEBT SUSTAINABILITY ANALYSIS AND
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4. Debt sustainability analysis and
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OCCASIONAL PAPERSOccasional Papers
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No. 46No. 47No. 48No. 49The Western
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No. 80 2011 Pre-accession Economic
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No. 119No. 120No. 121No. 122Possibl
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No. 1582013 Economic and Fiscal Pro
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