portion to their years of work and their contribu-
tions.
Today, actual contribution-benefit reciprocity in
regard to basic and supplementary pensions is
negative, since total contributions paid fall short of
pension expenditures by 15.7 billion euros! This is
the real deficit that the government has to cover
through regular and emergency budget funding.
Total pension expenditure stood at 16.7% of GDP
in 2015, against a euro zone average of almost
12%. Therefore, the new pension reform aims at
restoring equilibrium to the system, in order to
render it sustainable for the years to come.
This is why the new legislation provides for the
automatic adjustment of pension benefits through
the enactment of a “special law”, to ensure that
the increase in pension expenditure during 2009-
2060 will not exceed 2.5% of GDP. In accordance
with article 14 of the draft law “starting on
T
he new pension reform is one of the
measures included in the 5.4 billion euro
package that will be implemented in the
three-years 2016, 2017 and 2018. The objective
of the reform is to generate annual savings of 1.8
billion euros on a permanent basis from 2016
onwards, along with additional savings of approx-
imately 0.5% of GDP until 2018. Overall, the
measures of the pension reform package are
expected to generate savings of 2.7 billion euros.
In order to meet this goal, the government intro-
duces a system that establishes a closer link
between contributions and benefits, also introduc-
ing a minimum, state-guaranteed pension, the so-
called “national pension”. This pension is set at
384 euros (NB: on the basis of the 2014 poverty
line) and will be paid in full after 20 years of work.
The national pension will supplement the recipro-
cal portion of the pension paid to workers in pro-
Trade with Greece
74
A new landscape
in Greece’s
pension system
By Kostas Katikos
A new social security landscape is
about to emerge in Greece with
the reform that is underway as part
of the commitments undertaken
by the country’s government under
the third Memorandum.
