BUSINESS

Greek pensioners at lower risk of poverty, but high ageing rate a concern

TAGS: Economy

Some 17.3 million or 18.2 percent of older people (aged 65 and above) in the EU remain at risk of poverty or social exclusion, the European Union said in the 2018 Pensions Adequacy Report published on Monday.

The data has not changed since 2013, and this includes significant differences such as women's pensions, which remain 37 percent lower than men's.

Overall, the triennial report, which includes assessments for each member state, underlines that EU member-states must pay more and more attention to sustainable, adequate pensions in their reforms.

For Greece, the report mentions that “the 2016 pension reform is considered to be the most crucial reform of the pension system since its establishment,” since it “entails important redistributive elements, which are expected to have a positive impact on future pension adequacy.”

In spite of the successive cuts imposed over the period 2010-2016, pensions in Greece, it said, have played a vital role in preventing older persons from falling into poverty. The at-risk-of-poverty or social exclusion rate of people aged 65+ has decreased by 6.1 percentage points from 28.1 percent in 2008 to 22 percent in 2016 (against 35.6 percent of the total population in 2016).

According to the relevant OECD projections, future pension adequacy in Greece is ensured, in the long run, through the application of a higher future gross pension replacement rate for low-earners than the respective one for average-earners. But the report adds that ensuring adequate pensions for non-standard workers with short working careers and low earnings remains a challenge that needs to be addressed.

The report raised concerns about the future adequacy of pensions in Greece in the short run, given the recently adopted provisions of Law 4472/2017, which entail, among other things: (a) a reduction of up to 18 percent for each pension in payment (contributory and auxiliary) to be put into effect from January 2019; (b) the freezing of existing pensions at current levels until the end of 2022; and (c) the abolition of EKAS (the social solidarity benefit) by the end of 2019. All these provisions are expected to have a negative impact on the adequacy of pensions, especially for low-income pensioners.

The main concern of the pension system in Greece remains its sustainability, given that the country exhibits one of the highest rates of population ageing among the EU-28, along with very high unemployment rates. Nevertheless, among the main issues regarding the sustainability of the pension system is how to secure financial viability along with social effectiveness that would ensure, among other things, pension adequacy.

In this respect, it is imperative that the full accomplishment of the 2016 pension reform guarantees a decent level of benefits under the constraints posed by the level of economic growth together with the level of primary budget surpluses. Moreover, efforts should be concentrated on addressing specific pension-related challenges, such as: economic recession, high unemployment, non-standard employment, undeclared work and contributions evasion, the report concluded. [ANA-MPA]

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