Unions say new pension reform bill sets misdirected priorities

‘Focus should be on fighting contribution evasion; mergers will cause administrative chaos’

The General Confederation of Greek Labor (GSEE) said yesterday the government’s draft bill on social security reform, which has triggered a wave of strikes, was targeting the wrong sources for replenishing the actuarial deficit of the system.

“Over 30 years, the savings (resulting from the provisions in the draft bill) will cover only 6 percent of the deficit and over 50 years just 7.8 percent, while the viability of the system will be extended only by two years. (By contrast) if only 20 percent of the lost social security contributions were collected, revenues would increase by 40 percent and the system would ensure its viability by seven-and-a-half years,” GSEE told a press briefing yesterday.

The bill, which has now reached the committee stage in Parliament, increases the retirement age and reduces benefits, particularly for women and working mothers. It also provides for the merging of over 130 separate pension funds into less than 10.

Some experts say actuarial deficits for pension funds could grow to 400 billion euros, about twice the country’s GDP, in about 15 years’ time without reform.

GSEE President Yiannis Panagopoulos said the detailed provisions of the bill brought about a drastic deterioration in the terms of the charters of the individual funds to be merged.

According to GSEE, the administrative changes “seem to constitute the anteroom of a further social security adjustment in future, which will encroach upon the current insurance rights of all workers.”

It also pointed out the lack of preparatory studies for the mergers and predicted administrative chaos and functional deadlocks.

Furthermore, GSEE argues that the integration into the Social Security Foundation (IKA), the country’s largest fund, of two large supplementary funds, those of the National Bank and OTE telecom, will take an unacceptably long time, 15 years, for their benefits to become par with those of IKA.

Finally, the idea of a “social insurance piggy bank” is described as a bad copy of an idea already put forward by GSEE, “since financing it through a hike in value-added tax, as proposed, will function as a smoke screen for raising it by two or three percentage points.”

Since the government began the process of dialogue with unions and employers in preparation for the bill last year, GSEE’s most prominent demand has been for the state to meet its statutory obligations under previous laws for financing the deficit of the system. The bill contains no mention of the problem.