PM A. Tsipras’ secret plan for social security benefits

Author: newsroom  | Published: November 29, 2015

Leaders failed to reach a consensus that the Radical Left Coalition (SYRIZA) PM had hoped would give him bargaining leverage in discussions with Greek creditors

Greece’s leftist Prime Minister Alexis Tsipras called on political leaders to join forces and present a united political front so as to avoid further reduction of main pensions. The five leaders of seven politicalparties represented in Greek Parliament failed to agree on pension reforms following their six-hour deliberation.

Tsipras had hoped to get the leaders to agree on a statement that stopped further pension cuts so as to present this as a bargaining leverage in talks with Greece’s creditors. Instead, he got no support with opposition parties stating that they will not be “accomplices” causing Tsipras to burst out against them, explaining that they had already become “accomplices” when they voted for the prior actions in July while also pointing out to the eleven pension reductions (40% cuts) by the conservative New Democracy and socialist PASOK coalition. Furthermore, he criticized the opposition for being “irresponsible” and “unserious”.

The goal of social security reforms is to find a viable solution within the framework of commitments that Greece has pledged to. Pension cuts have already been forecast for 2016 with the goal of saving 1.8 billion euros. Specifically, the 2016 budget already includes measures worth 1.4 billion euros for social security of which 538.5 million euros concern pension reductions from private funds, 187.7 million euros from public pensions, and another 688 million euros from unknown sources. If the government’s proposal for increased contributions isn’t accepted, then main pensions will undergo another 3029% slashes and be recalculated, whereas auxiliary pensions will on average shrink by 200 euros per month.

Since August, Greek lawmakers have already voted through legislation that foresees 250-300 euros worth of pensions for those who have turned 67 years of age (Law 3863/2010). Those retiring after September 1, 2015, will have various cuts to pensions in slashes to affect hundreds of thousands of benefits.

The government’s proposals:

– Increased employer contributions by 1 unit for main pensions and an increase for auxiliary pensions (0.5 for employers and 0.5 for insured).

– Recapitalization of fund reserves so that part of the loss (at 40 bln euros) can be covered through the exploitation of assets and the creation of a fund to gather revenue for social security.