NEWS

Tougher pension system unveiled

The Cabinet yesterday approved a draft law which aims to ensure that Greece’s pension system, now teetering on the brink of collapse, will be viable in years to come but also means that before the end of this decade, the basic monthly retirement payment will be just 360 euros. According to the plan presented by Labor Minister Andreas Loverdos, the 360-euro pension will begin in 2018 but it will be indexed to inflation and the country’s growth rate. Crucially, the proposals would mean that as of 2013, everybody’s pensions would be calculated the same way, meaning that the current special deals for certain professions would cease. Deputy Labor Minister Giorgos Koutroumanis said the reform would see an average reduction in pensions of 7 percent by 2030. Also, pensions will correspond to no more than 65 percent of the pensioner’s monthly salary when they were working. Currently the lowest rate is 70 percent. Retirees will lose 6 percent of their pension for every year of early retirement that they take. «We are saving the pensions and healthcare, not only of this but also of future generations,» said Loverdos. «We are saving the economy.» The bill is due to be submitted to Parliament later this week and is likely to be voted into law by the end of the month. But Loverdos said that there could yet be changes to the legislation, depending on the government’s talks with European Union and International Monetary Fund officials. Loverdos added that, as of next year, contributions to the main social security fund, IKA, by employees and employers would increase by 3 percent.