ECONOMY

Inner cabinet approves pension cut plans

inner-cabinet-approves-pension-cut-plans

Labor Minister Giorgos Katrougalos’s plans for cutting mainly auxiliary pensions, increasing social security contributions and a number of other changes for millions of employees and pensioners were approved on Wednesday by the ministers that make up the Government Council of Social Policy, headed by Deputy Prime Minister Yiannis Dragasakis.

Several points still require fine-tuning, but the plan will face a stiff test when put to the representatives of the country’s international creditors, who have already expressed opposition to the hike in social security contributions as well as the non-application of income criteria when deciding who receives a national pension.

The latter are two of the government’s main policies that will determine the main points of the new social security bill – these being the level of cuts to the pensions currently paid out and the so-called replacement rate (the ratio of pensions to the salaries just before retirement) which will decide the amount of future pensions.

The announcement of the measures planned have already incited the wrath of the unions, but Labor Ministry sources say the 7-8 percent cuts to auxiliary pensions over 175 euros per month have already been decided.