NEWS

Pension rescue scheme unveiled

A plan to prevent Greece’s social security system from collapsing over the next few years was unveiled by Labor Minister Andreas Loverdos yesterday and it includes plans to limit pension payments and to keep people at work for longer. Loverdos caused a stir in December when he suggested that there was no money to pay state pensions. However, presenting his reforms program to a panel of seven experts yesterday, he said that changes would have to be made to the system otherwise it would be bankrupt within five years. «We are changing the pension system in order to keep it alive,» said Loverdos. His seven-point plan contains several key elements. This includes the provision that pensions will be calculated based on the average contributions a worker makes rather than taking into account the peak five years of his or her career. Also, compulsory retirement limits will be changed. Workers who complete 35 years of service can now retire at 58 but, as of 2015, this will increase to 60. The aim is to raise the average retirement age from 61 to 63 by 2015. The maximum retirement age for men is currently 65 but is only 60 for women and the European Union has asked Greece to close this gap. Loverdos said that the basic pension would not exceed 360 euros and that the maximum pension would not exceed 70 percent of the pay the retiree received while at work. He added that voluntary retirement schemes would be abolished. «These reforms are not just tinkering, they constitute a major overhaul to make the system more viable in the coming decades,» he said. The government is trying to save 4.5 billion euros this year as it attempts to secure the viability of the social security system and as part of a wider-ranging program to cut public spending.