Changes in pension system seen

Changes in pension system seen

“There are many things to be done on the pension system front,” new Deputy Labor Minister Panos Tsakloglou said this week, after his swearing-in.

Already, the Pissarides commission, a group of academics and private sector managers headed by Economics Nobel Laureate Sir Christopher Pissarides, has made preliminary proposals to overhaul the supplementary pension system, by introducing individual investment accounts. The final commission report will be made available in September.

Some statistics point the way in which reforms will be directed. Greece spends a lot on pensions (16.5% of GDP against a eurozone average of 13.2%), the state subsidy plays too large a part (10.1% of GDP versus 3.1% in the eurozone) and state spending on salaries and pensions is again too high (28.4% vs 23.1% in the eurozone).

​​​​​Experts say reforms must ensure long-term funding, not provide incentives for early retirement, and finally get the participants in the system to reap what they invest in it and not pay for the pensions of their elders.

Demographics, with the population rapidly aging, make the need for reforms more urgent.

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