Pensioners to receive 20% slashes

26 November 2015
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The government council on the social security system is expected to unveil its new social policy over the coming days. Radical Left Coalition (SYRIZA) members of the ruling party are waiting to see the extent of the cuts before taking a stand on the matter, however unionists are already in arms with strike action called by the National Confederation of Greek Workers (GSEE) for December 3 in reaction to the budget and demolition of social security rights.

On its part, the government appears to be rushing through measures in the hope that they will be passed through at a time of extreme turbulence for the main opposition New Democracy (ND) party that has internal friction prior to its election of a new leader.

Following the meeting of the government council on Wednesday, a press release concluded that reform proposals are moving along. Labor Minister George Katrougalos is currently in the process of examining alternative measures. The most plausible scenario so far envisages the adoption of a common pension rate to be at 60-65% of the pensionable salary (57% for main pensions + 8% for subsidiary pensions). All up, pension reductions are expected to range from 10-20% of current rates.

Katrougalos pledged that low pensions will be locked and kept stable, however he clarified that this would not apply in cases of early retirement.

Meanwhile, Greece’s creditors (EC, ECB, ESM, IMF) don’t want the replacement rate to exceed 55% (48% + 7%) and have introduced a provision to “correct” the insurance GDP-based parameters, revenue etc. with replacement rates for main pensions at around 57% to 65%.

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