ECONOMY

Greek pension crisis seen in 15 years’ time

Greece will face a pension crisis in 15 years unless it sets aside political infighting to tackle a problem that threatens its long-term prosperity, said the president of a committee working on the issue. Low birthrates and a chaotic social security system have made Greece one of the European Union’s biggest pension fund problems. The European Commission has said urgent measures are needed to avert a ticking «time bomb.» «If the system remains as it is, in 15 years it will need support from the state budget,» Nikos Analytis, president of the Experts’ Committee on Pensions, told Reuters yesterday. «If we try to tackle this problem in 16 years, we are lost.» Analytis said Greece was listed by the European Commission among five high-risk countries and its ratio of pensioners to workers would deteriorate from 1:4 now to 1:2 in 30 years’ time. «This means it will take two workers to support one pensioner,» he said. Government officials have said the hundreds of pension funds now in existence may have actuarial deficits close to -400 billion, twice the country’s current gross domestic product (GDP). Despite the Commission’s recommendations to tackle the problem as soon as possible, Greece’s conservative government has said it will not come up with a solution during this parliamentary term, which ends in about a year. Instead, it has set up the committee to produce proposals. Analytis said he hoped the committee would be able to give recommendations to the government by fall, although collecting data from the funds was proving difficult, partly because they are not fully computerized. The most likely course is a three-pillar system – state pensions, private pensions and an independently managed, combined employer-employee investment plan. This will require better regulation of private insurance companies, and merging hundreds of small state pension funds. «We must end up with four funds at the most – one for public servants, one for private sector employees, one for farmers and one for the self-employed,» Analytis said. Studies done in the past had been questioned, he said, and the committee would seek help from the UN agency the International Labor Organization (ILO) to gain credibility. «In Greece, everything is disputed and everything is politicized, it’s one of our curses,» he said. «The ILO cannot be disputed.» He said Greece must consider solutions such as extending the retirement age or increasing contributions – anathema to labor unions. «I think we are behind the rest (of Europe) and we have two special problems,» he said. «They are the fragmentation of our system and that it appears Greece has among the worst long-term demographics.» (Reuters)