BUSINESS

Considerable cuts are coming to 1.4 million pensions from 2019

ROULA SALOUROU

TAGS: Finance

The adjustment to pensions being considered by the government will inflict cuts ranging from 5 to 620 euros per month for at least 1.4 million pensioners if the reduction of the so-called “personal difference” – the gap between the pension as calculated according to the old method and that using the new calculation system – is imposed on all retirees.

Experts believe such a prospect will be very had to avoid as the country’s creditors, and particularly the International Monetary Fund, are refusing to accept a gradual reduction to pension expenditure, asking instead for an immediate cut adding up to 1 percent of gross domestic product within 2019.

Despite assurances granted to government deputies by Finance Minister Euclid Tsakalotos and Labor Minister Effie Achtsioglou this week, the bill Greeks must foot leads to an average pension cut of about 14 percent for more than 1.4 million pensioners.

Those to suffer the biggest cuts will be those with high pensions who departed after relatively few years of work, with their reduction amounting to 40 percent in some cases. However, there will also be some people on quite low pensions who can expect to see a rise in their monthly benefits, in some cases reaching up to 20 percent, if they have retired after many years of work.

The creditors’ technical experts estimate that the “personal difference” ranges between 7 and 39 percent. The biggest risk is to recipients of pensions exceeding 1,000 euros per month, who number about 750,000. They look set to see their pensions drop 18 percent as of 2019. This group includes civil servants with 35 years of work, uniformed officers, National Health System (ESY) doctors and university professors, among others. Pensioners of the former manufacturers’ fund (TEBE) will be hit with the greatest cut (of about 620 euros per month).

Although the government is trying to avoid this, at least for 2019, cuts of between 6 and 8 percent are in store even for those on the minimum pension set by the Social Security Foundation (IKA), which currently stands at 486.64 euros per month for 15 years of insured employment. The “personal difference” of IKA or civil servants’ fund pensioners (with as many as 40 years of service) amounts to an average of 22 percent of their current pension.

Online