BUSINESS

Back pension pay: Government between a rock and a hard place

ROULA SALOUROU

TAGS: Economy

The Greek government is facing the consequences of complying with a four-year-old decision by the Council of State, the country's highest administrative court, that determined pension cuts kicking in in 2013, as well as the abolition of the Christmas bonus, were unconstitutional.

Were the government to fully comply with the decision, in its widest interpretation, it would have to pay back a whopping 4.2 billion euros ($4.7 billion) a year from July 2015 – when the court issued its decision – to December 2018. And this covers only those who sued for back pay after the Council of State's decision. If one includes the (few) pensioners who had sued between 2012 and July 2015, the cost rises even higher.

There is a dispute among legal experts about paying back sums due from July 2015 to May 2016, when the provisions of the new pension reform law kicked in. Labor Minister Effi Achtsioglou has lately talked about paying back at least a portion of legally owed back pay.

So, the government is faced with a hard choice: pay enough back pensions and Christmas bonuses owed to satisfy the pensioners, especially with the looming – by October, at the latest – national election, but not so much as to derail fiscal policy and the big surpluses agreed with the lenders.

How much would individual pensioners benefit from back pay? Estimates range from 650 euros, for the low-pension farmers, to a whopping 27,000 for a pensioner getting both a main and a supplementary pension, getting back money for a three-and-a-half-year period.

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