According to the forecasts of the Ministries of Economy of Greece, in 2017 GDP will grow by 0.6%, which may indicate one thing - there is a clear tendency towards the end of the Greek economic crisis.
There is a decrease in unemployment, an increase in the number of jobs, a decrease in taxes and a drop in prices. The negative consequences of Greece joining the European Union, according to politicians, are behind.
Pensioners - the cause of all ills?
The IMF considers pensioners to be the main problem in Greece; the lion's share of GDP stands out for their state support. The inexorable aging of the population led to the fact that the Greek government began to pursue a policy of a phased increase in the retirement age: this approach should accelerate the process of overcoming the country's crisis.
So, what kind of pension in Greece and at what age do pensioners begin to receive state support?
New bill
Reforming the pension system implies not only a substantial reduction in the size of pensions in Greece , but also the establishment of a unified social insurance fund and an increase in the level of contributions.
As part of the reform, the government plans to act in three areas:
change in the procedure of social insurance;
quantitative growth of funds specializing in insurance and pensions;
development of a profitable alternative to obligations to creditors.
The main objective of the bill was to unite all functioning social insurance funds into one. Systematization led to the following: a new rate of m, recalculation of pensions for years of work experience, and as a result - to a reduction in the amount of state support for future pensioners. Nevertheless, the income of current pensioners remained at the same level.
The government’s plan to reform the pension system was based on a new algorithm for calculating the basic pension and changing replacement rates.
Greek pension accrual system
The reform affected not only the question of what kind of pension will be in Greece in 2017, but also led to changes in the pension system. So, the following funds are sources of social insurance of the population:
IKA is the largest national insurance fund.
RSA is a state fund that provides insurance for both the local population and migrants.
Support for civil servants.
The task of the above funds is extremely simple - to accumulate funds for representatives of various professional fields and pay them after a citizen retires. In addition, the funds provide pensioners with free medical care, provide with medicines and offer the possibility of a free flight to rest no more than once a year. The competence of the funds also includes material support for the disabled and low-income families who have lost the bread-winner. Depending on the accumulation of funds of which working category the funds are engaged, different funds settle in them. Nevertheless, the conditions of insurance are identical everywhere, people prefer funds based on territorial characteristics.
The pensioners' social insurance system is based on mandatory payments by employees and employers. The algorithm for calculating pensions in Greece is prescribed by law: the size of the pension is formed depending on the total amount paid. The pension of future pensioners largely depends on their seniority, as the decisive factor in calculating the amount is the period for which contributions to the fund are deducted.
Greek retirement regime: major weaknesses
In the context of the economic crisis, the Greek social insurance system failed. Experts highlight the following main problems that forced the government to implement new laws related to raising the retirement age:
decrease in natural population growth rates;
lack of labor resources;
mass migration of residents outside the country;
growth in the number of citizens who have reached retirement age;
job cuts;
lower wages;
reduction of contributions from employers and funds;
high level of corruption.
A retirement age of 67 years, according to economists, will allow the state to save up to 1 billion euros per year, which, of course, will have a positive impact on the stabilization of the system in the context of the economic crisis.
Greek pension: maximum and minimum
Eleven previous reforms to reduce the minimum pension in Greece did not stop the government this time. The main motivation for the introduction of the new bill was a loan of 86 billion euros, the country will receive the third program assistance only after the first changes in the pension system. If in 201 6 the maximum pension in Greece reached 2,700 euros per month, then in 2017 the “ceiling” is 2,300 euros. For citizens receiving multiple pensions, the maximum amount of state security decreased by 600 euros, dropping to the level of 3 thousand euros per month.
15 years of insurance - this period is necessary to receive a state pension in Greece. The government justifies the deadlines with the goal of protecting long-term unemployed people who are not able to fill out insurance days. So, as a result of the reform, the minimum retirement age in Greece was set at 67 years. Provided that the citizen's experience is 15 years, the state is ready to pay a monthly amount of 384 euros. The alternative age for retirement in Greece is 62 years. However, in this case, the total work experience should reach 40 years. What is the average pension in Greece? As a result of reforms, he reached a level of 500 euros per month.
The ratio of salaries and pensions in Greece
The crisis period affected the wages of the inhabitants of Hellas: if in 2012 Greek salaries ranged from 1.3 to 2.2 thousand euros per month, then in 2017 the average income barely reaches 700 euros. Thus, the minimum pension in Greece is about 60% of the income of an average citizen.
What to expect for future retirees
The reform, which provides for pension financing from the state budget, and not from contributions, implies an increase in insurance premiums by 1.5%. So, employers pay one percentage point, and workers pay ½ percentage points: this approach is designed to maintain the current pensioners' pensions at the same level.
According to political scientists and economists, the size of the pension in Greece will be significantly reduced in the near future. The Skai TV channel made calculations and published the following economic forecasts: the difference between the size of pensions for current and future pensioners can be from 15 to 35%. Under the new law, a citizen whose monthly income is one thousand euros will receive a pension of 764 euros. If the salary reaches two thousand euros, then state support with retirement will be equal to 1151 euros.
Opposition Opinion
The problem with the accrual of pensions in Greece , as well as the timing of citizens leaving for a well-deserved rest, led to disagreement among the main political forces of the state. So, the leader of the Communist Party of Greece, Dimitris Kutsumbas, expressed concern: “Concerns about the future of the existing social security structure are growing. Reforms will mainly affect young working people: tomorrow they will come with a request to receive a pension or medical, pharmaceutical assistance. The funds are dealing with all these issues. ” Kutsumbas called on all Greek people, including youth and workers, to rally and rally against social security reform.
Government position
The official representative of the government, in response to criticism from the opposition parties, issued a statement as follows: "The government is making every effort to save the insurance system and keep pensioners' lives at a decent level."
Changes in the retirement age, the size of the minimum and average pensions in Greece are government steps aimed at improving the living conditions of elderly citizens by reforming the social security system. “We do not want to get into another impasse related to future pension cuts,” the official representative said in a statement. The Prime Minister of Greece Alexis Tsipras, justifying the reform actions, noted that the need for reform is due to the fact that if the previous insurance system were preserved after five years, the Greek government could not provide pensioners with material support.
It should be noted that the government calls raising the retirement age the only effective step towards overcoming the negative consequences of the Greek crisis. According to the President of Greece Prokopis Pavlopoulos, the national problem of Greece is the pension reform. “Achieving social justice requires mobilizing political forces,” he said. The politician also called on parliament to seek a compromise.