The Hellenic Actuarial Society (HAS) has proposed the establishment of a compulsory “second pillar” in social security that would be responsible for creating capital stock, within the long-term context of a three-pillar pension system that it sees as necessary for Greece.
The HAS study, presenting four alternative scenarios for the ailing Greek pension system, stresses the size of the problem and the challenge of finding any easy solutions. It also points out that for the system to shift to long-term financial sustainability with decent benefits, it would require a significant period of high deficits. It is worth noting that the comparison relates to the social security system’s deficits before the reforms of 2015 and 2016.
After that period the deficit would drop significantly, according to HAS, but the system will not survive without a supplementary pillar to the main pensions (the first pillar) and to the private savings toward a future pension (the third pillar).
What is not explained is how the cost of transition from the existing redistributive system to one based on capitalization would be covered. The HAS study estimates that this way the reduction of deficits will be done without any impact on the sufficiency of benefits, as the second pillar can in the long run offer satisfactory sums.