BUSINESS

Bleak future for pension system

ROULA SALOUROU

TAGS: Finance

The rapid aging of the Greek population, the constant reduction of public expenditure on pensions and the ever-changing nature of labor with the strengthening of flexible forms of employment, are painting a very grim picture for the future of state benefits and in regards to growing inequalities among aged people in Greece.

The latest report on pensions by the Organization for Economic Cooperation and Development (OECD) is both revealing and disheartening, as it shows that in the not-so-distant year 2050, there will be 73 pensioners for every 100 workers.

At the same time the drop in state spending on the pension system continues, after it soared by 67.6 percent in the period from 2000 to 2013, from 10.4 percent to 17.4 percent of gross domestic product. State spending dropped to 16.2 percent in 2015 and is expected to fall to 15.5 percent in 2020, to 15 percent in 2025 and 14.1 percent in 2035.

The “Pensions At A Glance” report explains that this index is affected by the demographic issue – the decline in births, the aging of the population and the increase in life expectancy – with a direct impact on the size of benefits.

In 2016, therefore, following repeated interventions in the Greek social security system, the average age of retirement remains at 62 years against an OECD average of 64.5 years, ranging between Turkey’s 58 and Norway’s 67.

The report portrays the Greek reality according to which people will soon live much longer, and in order to secure a decent pension will have to put off their retirement or keep working after that. Of course in Greece only 50 percent of people aged between 55 and 59 years continue to work and just 3 percent of them are working pensioners.

OECD Secretary-General Angel Gurria warned that the challenges of economic sustainability and pension sufficiency are considerable and require bold interventions by the governments of the organization’s member states.

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