Minor fiscal impact from pension hikes

Minor fiscal impact from pension hikes

The increases planned for main and auxiliary pensions amount to additional public spending of 0.22 percent of gross domestic product, or 434 million euros, for 2020, but expenditure on pensions as a share of GDP is reduced from 14.8 percent to 14.6 percent this year, mainly thanks to the abolition of the pre-election handout of last spring, branded then the “13th pension.”

The actuarial study Labor Minister Yiannis Vroutsis submitted on Wednesday in Parliament shows that, despite the hikes, spending on pensions is decreasing and remains within the limits the European Commission has set for all European Union member-states. The study reveals that pension expenditure will drop from 15.6 percent of GDP in 2018 to 12.9 percent in 2030 and then to 11.9 percent in 2070, approaching the eurozone average rate.

The decisive role for this reform has been the slashing of the so-called 13th pension, amounting to some 970 million euros per year, that the bill to be voted into law in the next few days will abolish.

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