Greek Pension System Will Go Bust After 2016

ATHENS – Greek Prime Minister Antonis Samaras’ hopes for an economic recovery could be derailed in 2016 – the next scheduled national elections – and the last year there’s enough money so far to fund pensions.

With austerity measures imposed by the government on orders of international lenders creating record record unemployment and 1.4 million people out of work, there aren’t enough workers or cash-strapped businesses paying into the retirement system.

Excluding the seamen’s and farmers’ pension funds (NAT and OGA,) the reserves of the rest don’t even top 4.5 billion euros ($6.11 billion,) not enough to fund pensions after 2016, when the problem will explode, the newspaper Kathimerini said.

Worsening the problem has been the mass exodus of workers to retirement – some in their 50’s – the last four years in a rush to avoid further pension cuts and with salaries being slashed, pensions cut and public workers being fired to satisfy the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) which has put up 240 billion euros ($327 billion) in two bailouts.

It is estimated that the pension system will require additional resources of 900 million euros ($1.223 billion) in 2016, and climb to 1.88 billion euros ($2.55 billion) for 2017, 2.15 billion euros ($2.92 billion) for 2018, 2.40 billion euros ($3.26 billion) for 2019 and 2.67 billion euros ($3.62 billion) in 2020.

While a sizeable deficit for the pension system, it is far less than the 7 billion euros ($9.5 billion) in defense spending, including for four submarines critics said weren’t needed but were ordered so defense officials could skim off hundreds of millions of euros in bribes.

Since Greece won’t cut its defense budget further, the only option facing Samaras – unless he can find the funds elsewhere – is to cut pensions again, which would force him to break a vow that he would never ever again impose more harsh austerity measures.

The further cuts could be devastating, even for main pensions, while slashes to auxiliary pensions – and to retirement lump sums in defiance of a high court order they are unconstitutional – could begin on July 1, breaking the no-more-austerity promise.

Greece’s judiciary has not moved to put Samaras or any government official in contempt for refusing to abide by the orders to restore the lump sums earned over decades – and which were ruled to belong to the beneficiaries and not the government.

Retirees have seen their lump sums cut 38 percent and more while the government said it would abide by another court order to restore the pay – retroactively – of the military, police, emergency services personnel and other uniformed officers.

Pensioners have taken to the streets since 2010 in continuous protests against cuts to their benefits but enough people affected by austerity have continued to vote for the country’s ruling coalition, Samaras’ New Democracy Conservatives and his partner the PASOK Socialists, to keep them in power.