Pension cuts certain in 2019

Pension cuts certain in 2019

The reduction of pensions as of January 2019 is now certain. Despite the hopes that cabinet members had been cultivating up until Wednesday that the measure already passed would not be implemented thanks to performance of the budget, a senior Finance Ministry official ruled that out on Thursday.

Speaking after government officials’ meeting with the creditors’ mission chiefs in Athens, the same source said, “What has been agreed will be observed.” Therefore pensioners who retired before May 2016 will see their monthly benefit drop by 2 to 18 percent from January.

The reduction of the income tax discount will apply as scheduled from January 2020, the same official added, ruling out the possibility that the International Monetary Fund might call for the measure to be brought forward to next January, according to messages coming from European sources.

Still, the IMF will make its definitive decision in July, after the Hellenic Statistical Authority (ELSTAT) issues its estimate on the growth rate for the year’s first quarter.

The government appears satisfied with the course of negotiations with the creditors on fiscal matters as – according to the same source – the institutions have accepted the feasibility of the 3.5 percent (of gross domestic product) target for the primary surplus not only of 2018 but also for the following years too.

The Fund, the source added, has already revised its estimate for this year’s primary surplus from 2.9 percent to 3.5 percent. He went on to reveal that the creditors also accept that the 3.5 percent target will be exceeded as of 2019, even with the adoption of the measures to ease the tax pressure on citizens – the so-called countermeasures.

If this proves true – as it is not clear whether the IMF agrees – the government will certainly try to reap political gains by advertising plans for tax discounts and handouts from 2019 in order to offset the negative feeling from the pension cuts scheduled.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.