Court verdict on pensions could cost state dearly

The Council of State is due to decide on May 8 or 11 whether it should uphold an appeal by pensioners against cuts to their retirement pay in 2012 in a decision that could cost the government as much as 4.5 billion euros, thereby derailing its fiscal plans.

Judges at the country’s highest administrative court have already convened twice to discuss the appeal by 15 pensioners and are due to meet for the final time later this month. Court sources say that so far the majority of judges are in favor of ruling that the 2012 cuts to basic and supplementary pensions were unconstitutional as the same pensions had already been reduced previously.

If the court deems that these payments should be restored and the amount deducted since 2012 paid back, it could cost the state as much as 4.5 billion euros. However, it is possible that the amount due could be lower if the court decides that only the pensioners who have appealed against the cuts should also receive back pay.

There is a precedent for only those appealing, rather than all of those affected, benefiting retroactively from such decisions. The Council of State issued such a ruling recently in the case of retired university staff that appealed against cuts. The judges decided that all the employees affected should have their pensions restored but that only those who launched the legal action should be awarded back pay.

Sources at Greece’s social security funds say they will wait for a formal verdict to be issued by the Council of State, Greece’s highest administrative court, before assessing the impact of the decision.

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