Pension system feels the strain

Spending on pensions is expected to hit 24.5 billion euros this year, an 8 percent increase from 2005, as the number of contributors to social security funds continues to drop, according to the government’s 2006 social security budget which was revealed yesterday. The looming deficits in the country’s troubled pension system have spurred the government to push for reforms which some consider controversial because they could cut benefits and force people to work longer. But Labor Minister Savvas Tsitouridis says the government guarantees the funding of the pension system and its smooth operation and will provide the necessary resources for it. Total spending on health and welfare this year will demand 18.82 billion euros from the national budget compared to 17 billion euros last year. Workers are expected to hand over 9.6 billion euros to funds this year. The government data show that more workers are being insured either through a main or secondary fund, said Deputy Labor Minister Gerasimos Giakoumatos. But as more retirees draw pensions, fewer workers are contributing to social security funds, according to the government’s data. This year, there are 3.93 million workers paying into a system that supports 2.21 million pensioners. This figure means that for each pensioner there are 1.77 contributors. In 2005, the respective figure was slightly higher at 1.79 while more than 15 years ago it stood at 2.4. Experts believe that there needs to be four active workers for every pensioner in order for the system to be viable. The government said it will push ahead with the changes to the pension system after national elections, which are scheduled to take place by March 2008.

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