Worries for Greek gov’t and pensioners from court decisions

Worries for Greek gov’t and pensioners from court decisions

More than 19,000 applications are submitted every day demanding the payment of money lost as a result of pension cuts imposed in 2012 and 2015, ruled by judges as a violation of the Constitution.

Court decisions in favor of pensioners have resulted in over 200,000 applications being made to the Single Social Security Entity (EFKA) for the return of cut pensions. This is aside from the thousands of fresh complaints that have been filed and a torrent of decisions from first-instance courts, which have spread confusion among Greece’s more than 2.5 million pensioners, who are already struggling to make heads or tails of the issue.

Pensioners’ insecurity and anxiety is being exacerbated by the government’s inability to address the issue but also by the fiscal incapacity of the current and any future administration to implement the verdict of the Council of State, which would result in a bill of more than 9 billion euros in returns.

The social security system is at risk of becoming bogged down in a drawn-out legal battle, while any thought of implementing the court decisions for all pensioners, at least by December 2018, is nothing short of a fiscal nightmare. This is because, in theory, all 2.5 million odd pensioners – even those receiving as little as 500 euros a month – would be entitled to refunds from the abolished Christmas, Easter and holidays bonuses as well. Many pensioners could claim amounts in excess of 20,000 euros per person.

In an effort to stem the growing tide of lawsuits (even relevant adverts by law firms have been published), the Labor Ministry is encouraging pensioners to appeal to EFKA through its online system, which they appear to be doing en masse.

Experts estimate that the applications mainly work as leverage to pressure the government for a political solution to the problem, as the courts could take years to disentangle this complex issue.

The risk of a fiscal derailment and of an annual rise in pension expenditure by 3.5-4 billion euros grows heavier ahead of a fresh decision expected from the CoS on the constitutionality of upcoming pension cuts.

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