ECONOMY

Experts say pension law no real solution

Greece’s embattled pension reform law was expected to clear its last parliamentary hurdle last night but experts warn it will provide no solace to the troubled social security system. The law, touted by the government as the only way to shore up Greece’s pension funds which are expected by experts to collapse in 15 years if left unchanged, was met with months of crippling strikes and protests by unions and opposition parties. After rallying its slim majority in the 300-seat Parliament, where it has 151 deputies, the government passed the bill late last month and the House was due to reject a motion for a referendum on the issue at a midnight vote yesterday. But experts say the law is too weak to have any long-lasting effect on the system. «It is comic to believe that we have resolved the pension system problem,» said Panayiotis Zampelis, actuary and CEO of the Greek branch of consulting firm Hewitt Associates. «These reforms will have no real impact on its viability.» Greece, one of several European Union countries facing a pension crisis mainly due to an aging population, has been urged by Brussels to revamp a fragmented, wasteful and mismanaged system that is straining state finances. The law, which affects mostly women and especially working mothers, merges scores of funds into just 13, cuts many special and supplementary pensions and offers incentives to work longer. Little change But experts say it fails to address the real problems of a system whose actuarial deficits are seen at twice the country’s 230-billion-euro gross domestic product (GDP), such as funding and creating new forms of funds, the so-called pylons. «The changes are focused on the organizational side,» Zampelis said. «One wonders why the government would go to all this trouble for so little change.» He said total savings as a result of the reforms were not estimated at more than 1.5 billion euros, about 1-2 percent of actuarial deficits. Although labor unions and employers differ on how to shore up the system, both agree the law offers no solution. «The government’s measures are a step in the right direction,» the president of the Federation of Greek Industries (SEV), Dimitris Daskalopoulos, said recently. «But it is obvious that, once again, the real solution to our pension problem has been postponed for the future.» Unions, which have slammed the government for not paying state debts to pension funds and for curtailing workers’ benefits, say the gains from the reforms will be minimal. «Doomsday is postponed by a year and a half,» said Savvas Robolis, economics professor and a director of the main GSEE and ADEDY unions’ labor institute. «For the long-term viability of the system, we need to find new funds.» He said that, in comparison, if contribution dodging was cut by 20 percent, the system would gain seven-and-a-half years of viability. Unions have vowed to keep up strikes and protests even after the law takes effect, in about a month. The government has defended its stance, saying it took hard but necessary measures. «Pension reform is mild but substantial, securing social justice,» said deputy government spokesman Evangelos Antonaros.