BUSINESS

Pension spending per GDP is EU’s highest

TAGS: Finance

Pensions may have been slashed drastically, with the country faring high in poverty indexes, but the gross domestic product drop has contributed toward Greece ranking top in the European Union in terms of pension expenditure as a percentage of GDP.

Eurostat figures on Tuesday reflected the problems created in the past in the local social security system, as well as pointing to its future sustainability problems.

The European statistical service’s data showed that social protection spending in Greece which goes toward pensions amounted to 17.8 percent of GDP in 2015 – by far the highest in the EU. Crucially, pensions have been reduced further since then and are set to undergo a further cut as of January 2019. A distant second was Italy with 16.5 percent and France was third with 15 percent.

The high rate in Greece obviously does not translate into high takings per recipient; it is related to the structure of the Greek pension system, which is distributive and not redistributive, operating in a distorted fashion as there are too few workers and too many pensioners.

In the EU the average pension spending rate stood at 13 percent of GDP in 2014 – the most recent year with available data – against Greece’s 17.2 percent.

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