ECONOMY

Greek pension system is EU’s least effective

Brussels – A European Commission report comparing the 15 members’ pension systems and their overall cost to their respective economies confirmed what was already widely known: that Greece’s system is the least effective and that this year’s shallow reform of the system will do next to nothing to relieve the burden on the country’s finances. The report, drawn up by the Directorate-General for Social Affairs, overseen by Greece’s representative to the Commission, Anna Diamantopoulou, is especially damning for Greece. Not only is it an expensive system to maintain in terms of the country’s gross domestic product, but state financing is expected to grow at a faster rate than anywhere else in the EU. Moreover, Greece’s pension system is one plagued by an exceedingly complex legal framework, an abundance of social security funds and by great inequalities among even similar categories of pensioners. Moreover, the pensions provided are quite low. Greeks may have the right to retire quite early, but a large number of pensioners, far higher than the EU average, continue to work beyond retirement age. The number of those having to subsist on the minimum state pension and the government’s Pensioners’ Social Solidarity Bonus is also quite high. In the past decade, there were two attempts to reform the system. One, by the conservatives in 1992, did retard the financial bleeding but created enormous inequalities between those who had already entered the job market and those who followed. The Socialist government’s reform mostly kept the previous reform intact but did nothing to make the system more viable. The Commission report estimates that, without the reforms, state financing of the pension system would rise to 24-24.5 percent of GDP by 2050. After the reform, it will rise to 22.6 percent, a whopping 96.8 percent rise from 2000, when financing was equivalent to 12.4 percent of GDP. This is the largest increase in the European Union. Besides suffering from an increase in the number of pensioners, Greece also suffers from under-employment. Only 55.4 percent of all Greeks are in the work force, versus an EU average of 63.9 percent.