BUSINESS

Pension setup sustainable only with cuts

ROULA SALOUROU

TAGS: Finance

It is only through the planned cuts to pensions that the medium- and long-term sustainability of the Greek pension system can be secured, according to an actuarial study submitted to the European Commission by the Labor and Social Security Ministry.

Although behind closed doors the government is assessing the consequences of only partially implementing the cuts scheduled for 2019 – so as to spare some 700,000 low-income pensioners – the data forwarded to Brussels do not incorporate such a prospect.

Sources say that the actuarial study proves not only that pension expenditure is seen dropping below 16.2 percent of gross domestic product next year, but also that the plan is to keep lowering it up to 2060, taking it below the European average. Greece used to have one of the highest pension expenditure rates in the EU.

State spending on pensions will drop from 17.3 percent of GDP in 2016 to 14.3 percent in 2020. The European average is 13 percent. This will be due to commitments stemming from the third bailout and scheduled cuts. Expenditure will gradually decline to converge with the European Union average. By 2040 it will come to 12.9 percent and by 2060 to 10.3 percent.

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