FINANCE

Spending on pensions is set to decline

spending-on-pensions-is-set-to-decline

Pension expenditure in Greece came to 18% of the country’s gross domestic product in 2020 due to the effects of the pandemic on the Greek economy and the successive court verdicts that canceled laws from the bailout period, leading to retroactive payments to hundreds of thousands of pensioners.

Although the rate has overshot the European target, the situation is immediately amended for the rest of the decade, even if the reference year is not the pandemic-stricken 2020 but 2019.

Besides the revised forecasts regarding growth and the state debt, the Stability Program for 2021-24 that the Finance Ministry submitted to the European Commission on Friday also includes estimates about the course of pension spending as a share of GDP, which are clearly affected by the adjustment in the 2020 GDP and the obligation for rebates to pensioners based on the latest Council of State decisions.

Projections show that there will be a considerable reduction in pension expenditure over the next few years, eventually resulting in a 6.4-percentage point cut in age-related spending as a share of the GDP up to 2070.