Greece has halted welfare or pension payments to 200,000 people either because they are not entitled to the money — or because they are dead, a Labor Ministry official said on Wednesday.
The number of people involved in the abuse, dead or alive, is roughly equal to 2 percent of the Greek population.
Benefit fraud is common in many welfare states, but Greece has come under heavy pressure from the EU and the IMF to crack down in return for its latest 130 billion euros (US$172 billion) bailout.
Scams often involve people lying to officials who are too disorganized, chaotic or even corrupt to prevent the abuse.
Mismanagement has allowed some families to keep drawing pensions of relatives who have died, but an unusually high number of Greek centenarians drawing old-age benefits — 9,000 — prompted the authorities to take a closer look last year.
Simple data crosschecks since September last year had revealed the abuse.
“They were caught during the inquiry and the state is reclaiming the money they have illegally taken,” the senior Labor Ministry official said on condition of anonymity, adding that thousands of cases had been sent to court.
Halting the payments would save the state up to 800 million euros a year, the official said.
A former senior official at the ministry, Athina Dretta, said a lack of communication between government bodies was the problem.
“Registry offices did not even have an automatic system to notify deaths to social security funds,” Dretta said.
Officials also became suspicious when they noticed unusual concentrations of blind or disabled people in certain cities and islands, where corrupt social security employees were at work.
Some welfare recipients were found to be working as taxi or truck drivers.
With nearly a quarter of the 11 million population retired, the generous welfare state has been partly blamed for a debt crisis that has shaken the euro since it began in 2009.
The pensions fraud drew fire in countries which have funded Greece’s bailouts, notably in Germany.
Last year, the head of a business lobby in Germany’s ruling CDU party, Kurt Lauk, said pension fraud was “proof of the need to examine every last inch of Greece’s finances, before even one cent [in aid] is provided.”
Generous pensions are largely a thing of the past. Greece has cut them by an average 25 percent to balance the books of its state-run social security system, outraging the retired and fueling discontent with the bailout’s austerity conditions.
Athens secured the bailout last month to avoid bankruptcy and stay in the eurozone, its second rescue by the EU and the IMF in two years.
“The more authorities crack down on fraud, the more law-abiding recipients will be spared further savage pension cuts,” the Labor Ministry official said.
However, efforts to shore up the social security system are being hampered by a wave of business closures and a rise in unemployment to a record level of nearly 22 percent.
The main pension fund, IKA, gobbled up 44 percent of its full-year funds as early as the first quarter, according to budget data published earlier this month.
Government grants to plug the social security system’s deficits rose by 16 percent year-on-year over the same period to 1.6 billion euros.