The Best of GRReporter
flag_bg flag_gr flag_gb

SYRIZA’s pension reform is an attempt to perpetuate an unjust system

28 January 2016 / 17:01:39  GRReporter
4077 reads

Furthermore, I believe it is necessary to introduce a strictly regulated retirement age, for example 65 or 67 years depending on the demographics. This rule should apply to all, with minimal exceptions only for particularly heavy occupations to which people could not respond at that age. I mean to remove all the existing exceptions, such as those for the military who retire at the age of 45, for the employees at the state enterprises and for the state employees who retire early on the basis of conditional length of service (e.g. the military service is recognised as length of service) and so on. In Greece, there are too many people aged 50 and 55 who are receiving pensions. All this should have been cancelled so far, overnight and without any transitional arrangements.

Unfortunately, I do not find similar measures in the presented bill. All I see is an attempt to avoid the reduction of pensions at this point and to shift it in time, for when SYRIZA will no longer be in power.

Which is the sustainable pension system for Greece? What changes should be made?

As already mentioned, this is a pay as you go system and pensioners are enlisted in a large number of pension funds that had gained various privileges over the years; the situation cannot continue in this form. The main reason is that today's workers are receiving much lower salaries than the previous generation. In fact, today employees with salaries of around 500 euro are expected to fund with their contributions pensions amounting to 1,500 euro, just because it is considered an acquired right.

Obviously, this cannot continue, so I think we need to move to a new system, similar to the one I have previously described. That is to introduce a national pension of 600 euro for all upon turning 65 or 67, without any other requirements. A pension fund should also operate that would collect pension contributions and pay pensions to those entitled to receive a second pension based on their length of service and paid contributions.

Further on, a system of capital cover should operate, based on private insurance, which would be optional. Employees and employers should be able to "invest" money in it in return for tax concessions that would be converted into capital, which would allow them to be paid a third, supplementary pension in the future.

The establishment of this absolutely logical, sustainable and equitable scheme would take a transitional period in which workers and employers would pay gradually decreasing contributions and consequently the very high pensions would be reduced.

Are the grounds for carrying out the pension reform demographic or economic and to what extent?

I think they are partly demographic. The population is aging, but this is true for the whole of Europe. On the one hand, the number of adults is growing and on the other, the number of pensioners is growing much faster than the number of workers. Thus, each worker is bearing a heavier burden.

That is not the main problem in Greece. Here it was that for many years the political system pretended not to see this fact, namely that life expectancy is increasing, that young people are entering the labour market later because they are studying longer, etc. Instead of beginning to provide solutions to the current imbalance, the political system exacerbated the problem. The people insured in some pension funds were entitled to retire at an earlier age, attempts were made to find funding for some funds from other sources, in the form of taxation of third parties. For example, the pension fund of journalists is funded with a percentage of the ads. The fund of lawyers received funding as a percentage of the fees for the transfer of immovable property. I.e. privileges were established that worsened the economy in favour of specific guilds. According to me, "the root of evil 'is namely that the political system did not tell the truth to the citizens and did not provide a solution to this problem.

According to the report of the Bank of Greece, trade turnover fell by 15% in the third quarter of last year and capital controls caused serious difficulties for small and medium businesses. Would they be able to survive if the social security contributions increase?

No. As I have said earlier, they are struggling to pay them now and many people owe money to their insurance funds. The situation will worsen if they increase.

I think that the intention of the government is the product of obsession of the left wing that no matter how much taxes increase, there will always be people who will pay them. Well, no cow gives milk forever. At some point it stops.

In conjunction with the problems caused by the imposition of capital controls and taxes, many people will prefer to close their businesses. This will open up a bigger hole in revenue than expected.

Therefore, the solution is not to try to continuously provide new revenues but also to limit costs. But, as you understand, this measure is particularly unpopular.

Will the particular pension reform take place or could it put an end to this government?

I think creditors will anyway reject the proposal to increase pension contributions.

Moreover, it is uncertain whether the 153 MPs of SYRIZA and Independent Greeks will vote on the bill. I see no desire on the part of other parliamentary parties to support it. On the other hand, SYRIZA has not tried to maintain an open contact with parties like PASOK or Potami that, under certain circumstances, could potentially enter the government coalition. The Union of Centrists itself has burned the bridges of likely cooperation, saying that it does want to enter the government.

Tags: PoliticsSYRIZAPension reformPension systemProtestsIncrease in social security contributions
GRReporter’s content is brought to you for free 7 days a week by a team of highly professional journalists, translators, photographers, operators, software developers, designers. If you like and follow our work, consider whether you could support us financially with an amount at your choice.
You can support us only once as well.
blog comments powered by Disqus