Pension deal may cause big shakeup

The move by Greece’s largest bank to offer voluntary early retirement to almost one in seven of its employees looks likely to cause wide ripples in the country’s rickety social security system. National Bank of Greece sources told Kathimerini yesterday that the bank’s management would like to link the matter of the 1,914 employees who have been offered attractive incentives to take early retirement with the prospect of NBG’s pension fund being incorporated sooner than scheduled into the state-run Social Security Fund (IKA). Under legislation on social security passed in 2002, all bank pension funds must have joined IKA by January 1, 2008. Both IKA and the NBG workers’ union – not to mention the Finance Ministry, which is in no position to increase funding for IKA – are unhappy at the prospect of the bank pension fund joining IKA sooner, rather than later, without substantial financial guarantees. Given that NBG’s social security contributions to IKA will amount to some two-fifths of what it currently pays to the bank fund, the bank has a strong incentive to accelerate the integration process. So far, NBG Chairman Takis Arapoglou has pledged a total of 6,000 euros for every retiree to the bank’s main and auxiliary funds. However, this will not be enough to redress the imbalance in the worker-to-pensioner ratio, which is currently 1 to 1.3 and will fall to 0.87 to 1.3 after the retirement program. The mass retirements would cost the bank’s main pension fund some 52 million euros, while the auxiliary fund – which is already 3 million in the red – will lose an estimated 20 million.

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