Greek parliament adopts law on reforms, paving way for third bailout program

he law fixes changes in the tax legislation, in the sphere of social benefits and insurance, and an increase in the retirement age

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Greek parliament adopts law on reforms, paving way for third bailout program

he law fixes changes in the tax legislation, in the sphere of social benefits and insurance, and an increase in the retirement age

READ THE ORIGINAL POST AT tass.ru

A Greek paradox: many elderly are broke despite costly pensions

But the Greek side said among their suggestions was slashing a top-up payment that supports some of the poorest pensioners. For Razi, that would ...

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A Greek paradox: many elderly are broke despite costly pensions

But the Greek side said among their suggestions was slashing a top-up payment that supports some of the poorest pensioners. For Razi, that would ...

READ THE ORIGINAL POST AT www.reuters.com

Pension Cost in Greece Reaches 16-Year High at €28 Bln Annually

As the number of pensioners in Greece increases rapidly, pension costs reach a 16-year high at 28 billion euros per year. While creditors press for pension cuts and a stop to early retirement, the cost of pensions puts security funds at great risk. According to figures by the Hellenic Statistical Authority (ELSTAT), about 130,000 employees are eligible for retirement, while another 150,000 retirement applications are pending because applicants have not reached the age or working years required. These two numbers will be added to the already existing 2,654,748 pensioners, sending annual pension costs to 28.14 billion euros annually. This is a 16-year record high. The new pensioners will create a 1.8 billion euro deficit in pension funds in 2015. According to social security funds officials, the rapid rise in the number of pensioners brings pension costs at 2.35 billion euros per month, with 1.35 of that taken from the state budget.

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Greece spends 16.2 pct of GDP on pensions

Greece will remain among the countries with the highest pensions in Europe over the next four decades if reforms concerning the level of pensions and the age of retirement are implemented, according to a European Commission report.

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Greek Government Will Not Implement Pension Cuts

The Greek government will abide by the Council of State’s decision regarding the pension cuts of Greek citizens, assured Secretary General of Social Security Giorgos Romanias. “If the Council of State rules that cuts to basic and supplementary pensions made in August 2012 were unconstitutional, the current coalition will abide by the decision even though this could mean having to find another 1.5 billion euros a year to pay retirees,” Romanias told Mega TV. The Secretary General of Social Security stressed the government will have no problem with paying pensioners. Romanias also noted that insured Greeks, who acquired their pension rights by the end of 2012, will not be affected by any changes to the system of early retirement. He added that the government was looking for ways to spread the fiscal impact over time if the court rules that pensions have to be restored retroactively and not just from the day the verdict is issued. He also estimated that the fiscal cost of such a decision would be 1.5 billion euros.

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Extension to pension fund debt deadline

The Labor Ministry has embarked on a battle to increase the revenues of social security funds and their possible transfer to the Bank of Greece. After long queues formed outside pension fund buildings on Tuesday, especially at the fund for the self-employed (OAEE), Alternate Minister for Social Security Dimitris Stratoulis decided to extend the process for the settlement of debts to funds in 100 installments by one more month.

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Social security problem is due to general economic issues

Only a growth shock could save the Greek social security system: Even after the interventions of the last five years in terms of retirement age limits, pension levels, expenditure cuts and distortion corrections, which resulted in savings of some 14 billion euros per annum, the system is again ailing.

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Social security problem is due to general economic issues

Only a growth shock could save the Greek social security system: Even after the interventions of the last five years in terms of retirement age limits, pension levels, expenditure cuts and distortion corrections, which resulted in savings of some 14 billion euros per annum, the system is again ailing.

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Aging Population in Greece Raises Retirement Age to 70

As Greece is aging demographically, the retirement age will rise in the not so distant future, according to a recent study by the National Actuarial Authority. The study, that was submitted to the European Commission, also shows that the Greek population will shrink dramatically. In 2014, the population in Greece was 11.045 million and it will drop to 8.5 million in 2060. By then, six out of 10 Greeks will be over the age of 65 and one in four between 65 and 74 will still be working. The average retirement age will be 71.9 years then and auxiliary pensions will shrink or disappear altogether. It is estimated that the replacement rate for pension spending will drop from 80 percent today to 56 percent by 2060, with the decline starting no later than 2020, when the rate will reach 64.6 percent. These figures will also depend on possible claims on the reserves of pension funds by the government. The population decline will be mainly due to a decrease in net immigration up to 2030. This will double the rate of the active population aged above 65 years old from three in 10 today to six in 10 by 2060. In turn, elderly workers will choose to stay in employment. While in 2013 just 4.9 percent of the workforce was aged between 65 and 74 years old, by 2030 this is estimated to rise to 14.3 percent before climbing to 24.4 percent in 2060. The study further shows that in 2026 the average age of the country’s workforce will be 44 years old, compared 39 as it stands today. The average age of entry in the labor market will remain stable at 22.4 for men and at 24.7 for women, but due to recent changes in retirement age thresholds the average age for retirement for men will rise from 61 years old in 2013 to 64.9 in 2020, 65.9 in 2030 and 67.5 in 2060. For women it is projected to increase from 61.2 years old in 2013 to 65.5 in 2030 and to 67.1 by 2060.

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Greek Deputy Health Minister: Govt will not Cut Pensions

Greek Deputy Health Minister Dimitris Stratoulis ruled out on Friday the possibility of further cuts in main or supplementary pensions or a retirement age raise. “There are no cuts in our government for pensions, neither in the main, nor in the supplementary ones and there will be no new rises in retirement age. These things ended with the vote of the Greek people in January 25,” the Minister said in a statement. Stratoulis said the employees’ rights in the public and private sector will not be affected. “The only order we have given our agencies is to prepare the legislation that will help us end pension cuts, rises in retirement age and implement our government’s proposals for the support and upgrade of social security and pensions.” The Minister also said the Greece’s new government will soon submit draft bills to Parliament for settling debts toward the pension funds, for changes in the social security funds of uniformed employees, for securing insurance for school guards and for providing health insurance to the long-term unemployed, the underemployed and the uninsured elderly and ethnic Greeks. (source: ana-mpa)

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Greek Deputy Health Minister: Government Guarantees Pensions

“If there are any difficulties, we have a plan to deal with them and have sufficient financing,” Greek Deputy Health Minister Dimitris Stratoulis said on Monday during an interview with Athens-Macedonian News Agency. Stratoulis confirmed that the restitution of previous losses on pensions “will be gradual and based on the numbers of economic recovery.” Asked on how social security revenue will increase, he replied: “The coffers of the social security funds will be boosted if our plan for economic recovery, the restart of the economy, succeeds, which we believe it will.” Stratoulis noted that the Ministry already has a list of big debtors to social security funds and plans to publish them. However, he stressed that the main thing is to use all legal and political means to collect these debts. Regarding the administration of social security funds, he said: “Changes will be made, but in time, because our priority is to stop the destruction of pensions, the plans for new pension reductions and the increase of the retirement age as of 1/1/2015 provided by the Memorandum legislation.” (source: ana-mpa)

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Public Pensions Are America's Greece

Bruce Rauner, a Republican, liked to talk tough about unions and public-sector pensions when he was campaigning for governor in Illinois. "The system is full of fraud and self-dealing and abuses, such as folks who have a pay rise in the last years of their career [so their pension is higher] or folks who moved in and out of certain jobs, so they could get a pension," he said in August 2013. With two or three pensions, some are making as much as half a million dollars in retirement pay, he claimed. This, he thundered, is a rip-off of taxpayers and other workers. But as soon as Mr Rauner was elected last month, the self-made millionaire toned down the rhetoric. The size and complexity of the public-pension mess suddenly hit him, and, aware that he had to bring together Democrats, unions and creditors, he began to backtrack. He declares now that it is most important to "protect what is done--don't change history. Don't modify or reduce anybody's pension who has retired, or has paid into a system and they've accrued benefits." Illinois is like Greece in one obvious way: it overpromised and underdelivered on pensions and has little appetite for dealing with the problem, says Hal Weitzman of the University of Chicago Booth School of Business. This large Midwestern state, with a population of 13m (Greece has 11m, though a far smaller GDP than Illinois), has the most underfunded retirement system of any state and the largest pension burden relative to state revenue. It also has the highest number of public-pension funds close to insolvency, such as the one looking after Chicago's police and firemen. According to the Civic Federation, a budget watchdog, Illinois has piled up a whopping $111 billion in unfunded pension liabilities (see chart), in addition to $56 billion in debt for health benefits for pensioners. The state devotes one in four of its tax dollars to pensions, which is more than it spends on primary and secondary education. Mainly as a result of this gargantuan pension debt, Illinois's bond rating is the lowest of all the states, which means dramatically higher borrowing costs. When the state government failed to address pension underfunding in its budget for 2014, two credit-rating agencies, Fitch and Moody's, cut the state's bond rating, which in Moody's case put Illinois on a par with Botswana. (An incensed editorial in the Chicago Tribune asked what Botswana had done to be so insulted.) The main reason for the pension debacle is decades of underfunding. "Everything was always done with a short-term view," says Laurence Msall, head of the Civic Federation. "Unique to Illinois is the idea that you don't have to pay for pensions and you don't have to follow actuarial recommendations." Whereas most other states follow the rules set by the Governmental Accounting Standards Board (GASB), which, however imperfect, require some budget discipline, Illinois has mostly ignored them. In 2013 the state paid $2.8 billion into its pension fund for teachers, one of its five pension funds, but GASB rules would have required a contribution of $3.6 billion, says Joshua Rauh, a professor of finance at Stanford University. According to Mr Rauh's calculations, Illinois's true unfunded pension liability is $250 billion. All the other calculations, he says, are based on over-optimistic assumptions. For example, the state assumes an average annual return on its investments of 7.75% over 30 years. But according to Mr Rauh it has only a 25% chance of achieving gains of that order. After the public-relations disaster of the credit downgrades, Pat Quinn, the outgoing governor belatedly pushed for pension reform. In December 2013 the legislature approved a bill that reduces annual increases in pension payments, increases the retirement age and caps pensionable salaries. Some have welcomed it as Illinois's first actuarially sound pension-funding scheme, designed to get the five plans fully funded in 30 years. Mr Rauh, however, thinks that the reform "does not even come close to addressing the problem". Mr Quinn's changes were supposed to become law in June, but were held up by legal challenges and ultimately rejected by Judge John Belz of the Sangamon County circuit court for violating the state constitution, which makes existing pension contracts virtually untouchable. (Only New York and Arizona have similar safeguards in their constitutions.) Lisa Madigan, the state attorney-general, has appealed against the ruling to the Illinois Supreme Court, which is looking at the case. James Spiotto, a lawyer at Chapman Strategic Advisors, argues that if a state is unable rather than unwilling to pay its pensions, then the well-being of its citizens overrides any constitutional protections. The Supreme Court has consistently ruled that states cannot abdicate their responsibility to provide essential services and infrastructure. And if Illinois cuts public services yet further the state will lose more taxpayers, resulting in "a death spiral", says Mr Spiotto. Union representatives disagree with this scenario. Dan Montgomery, the president of the Illinois Federation of Teachers, believes Mr Quinn's reform is illegal and that the state must find ways to pay up, for instance by extending the repayment schedule of its debt and increasing tax revenue by closing loopholes and expanding a sales tax on services. Mr Rauner was elected on a promise that he would not make his predecessor's temporary increase of income and corporate tax permanent. But he has not explained how Illinois will cope with the loss of more than $7 billion in annual revenue. Nor has he laid out any broader plans for fixing the pensions mess. For a start he might look to Washington and the budget deal hashed out in Congress. This allows some distressed private-sector pension plans to cut the benefits of retirees. In Illinois, though, more inventive measures may be needed. In 2015 Illinois will either sink further into a Greek-style morass of debt or start its long-delayed rehabilitation. Mr Rauner has warned of a rough 24 months ahead. "I ain't going to be Mr Popularity for a while," he says. Voters may not mind, if he is able to sort this disaster out.Join the conversation about this story »

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Employed Greeks Rush for Early Retirement

Employed Greeks who belonged to special state and bank retirement funds rushed to retire early now that all security funds have been incorporated to the Social Security Fund (IKA). Figures from Helios — the Labor Ministry database — show that in the last four months, nine out of ten employed Greeks who opted for retirement were under the age of 62. Between September and December 2014, 76.33 percent of all new retirees insured in the public sector were under 62 years old. Of those, 91.96 percent were insured in special security funds. In the years of the economic crisis that brought several labor reforms, employees in the public sector opted for early retirement in order to get the large retirement bonus they are entitled to. The lump sum public sector employees get when they retire has been subject to cuts in the past four years. Many employees who had worked more than 25 years in the public sector used special clauses and loopholes in order to get an early pension and secure the retirement bonus while it is still large. Also, the Greek government has “aided” many public sector employees to retire early in order to produce smaller numbers of public employees, in compliance with the reforms proposed by Greece’s international creditors. The voluntary exit programs introduced by the state, generated many early retirees.  

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Pension review has saved state 42 mln euros, alternate finance minister says

A review of the pensions being paid out by the Greek state and new, stricter rules governing pension registrations have led to savings of a total of 42 million euros in the past two years, Alternate Finance Minister Christos Staikouras said on Tuesday. An... ...

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Pension system nears breaking point

The ticking time bomb of the social security system will not explode in 2025, but 10 years earlier, or next year, according to a study by the Institute of Labor of the General Confederation of Greek Labor (INE/GSEE) which is to be presented in Thessalonik... ...

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