Reppas to ask for party support in social security reform

Labor and Social Security Minister Dimitris Reppas is soon expected to ask the ruling party PASOK to intervene in the issue of social security reform, as one way of putting pressure on his economy and finance colleague Nikos Christodoulakis who has steadfastly refused unionists’ requests for higher state funding for the system. Trade unionists have asked that the government increase its share of funding in the social security system, making this the sole prerequisite for a successful outcome of any discussion on the issue. The PASOK party’s involvement in this issue naturally does not go against parliamentary democracy. However, it does run counter to the government’s promise of modernization and its vow to separate the party from the State. For Reppas and his deputy Robertos Spyropoulos, who have been holding talks with top trade unionists for the past month, getting the party involved in the issue appears to be the sole weapon that could cause Christodoulakis to shift his position. Both Reppas and the trade unionists have reached agreement on certain issues which do not affect the social security rights of the majority of those insured: pensioners receiving low benefits and those who were insured after 1992. The minister and unionists have agreed to increased benefits for these two groups. Based on this accord, they have suggested that the two sides could now resolve the social security issue amicably and, at the same time, deliver a significant pre-electoral advantage to the government on the eve of municipal and prefectural elections in October. The political benefits to the government in the event of a successful outcome of social security reforms would be huge and simultaneously a major embarrassment to opposition New Democracy. This is because one of the government’s proposals entails modifying law 2084/92, also known as Sioufa’s law, which refers to the social security rights of the newly insured. The labor minister has already agreed to increase by 10 percent to 70 percent the replacement rate (the ratio of pension to salary) for calculating the pensions of those who entered the workforce after 1992. He has also agreed to improved conditions for the newly insured who seek early retirement. The costs to the social security system from these proposals are not considered significant, as this group of wage earners is set to retire after 2020. This is the reason why Christodoulakis agreed to the proposals as well. Concerning the replacement rate for wage earners who were insured before 1993, the agreement between Reppas and unionists specifies that the sum of the principal and auxiliary pensions does not exceed 100 percent, namely, up to 80 percent for the first and up to 20 percent for the second. The government had previously agreed to a cap of 60 percent for the principal pension. Issues that still have to be resolved are minimum pensions and unionists’ requests for an increase, as well as the introduction of a national pension. Britain’s Government Actuary has been asked to calculate the costs of tripartite funding for a national pension of 40,000 drachmas, 50,000 drachmas and 60,000 drachmas, and a minimum pension of 126,000 drachmas, 129,000 drachmas and 132,000 drachmas. The labor minister and unionists have also concurred on how to exploit the real estate assets of the social security funds which would increase funding for the system. The social security funds are estimated to own property valued at around 290 billion drachmas. The ministry has prepared a circular setting out the conditions and the procedures by which the funds could invest in mutual fund activities. The heads of the three principal social security funds are due to meet with Reppas and Christodoulakis on Thursday to approve the launch of a mutual fund company. One issue that is still open for discussion is the State’s debts to the Social Security Foundation (IKA) and the Social Security Fund for the Self-Employed (OAEE) and when it will make its first payments, thus enabling the two bodies to be able to come up with the monies to acquire mutual funds for the new company. The social security funds are currently reviewing the procedures relating to the hiring of an investment advisor for the proposed mutual fund company. Trade union umbrella body GSEE has already agreed to a number of compromises in connection with social security reforms. It has dropped its demand for increased government funding and is now open to discussion on the actual amount that could support the system. FRIDAY

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