Labour Minister Marinos Moushouttas is expected to unveil the pension reform bill on Wednesday at a meeting of the Labour Advisory Body, barring any last-minute surprise.
Even if the bill reaches them the day before the meeting, as Moushouttas said in recent statements it might, the social partners are not expected to manage either to study it or to comment on specific points within 24 hours.
The bill has slipped repeatedly. It was first due within June, then put back to the end of July, and it has now reached the middle of August. That has sharply narrowed the time available for substantive discussion between the social partners and Labour Ministry officials.
Moushouttas is sticking to his decision to deliver the bill to the House of Representatives on September 20 and to have the pension reform take effect on January 1, 2027. The Labour Advisory Body meets again on August 28.
The five main issues
Five issues concern the social partners and may account for the government’s delay in finishing the bill. They are the size of pension increases, particularly to minimum pensions, the formula to be settled on for reducing the 12 per cent penalty, and changes to the procedures for young people entering the social insurance system. The other two are the restoration of benefits withdrawn from widowers and the investment policy of the Social Insurance Fund.
Concerns over investment policy
On that last point, economists Giannis Telonis and Tasos Giasemidis told Phileleftheros that the Fund’s investment policy needs particular care and the best design possible, because it will handle pensioners’ money and should be managed by experienced professionals in the field.
Both said that ending the practice of the state borrowing the Fund’s surpluses is not expected to have much effect on public finances. They focused instead on the investment policy that will be applied to those surpluses.
That practice may be considered wrong as a matter of principle, they said, but it should not be overlooked that it delivered a respectable return to the Fund. The concern, they said, is that matching that return under the new arrangements could prove difficult, which would cause discontent.
The sum the Independent Authority will be called on to manage will be enormous at some stage. The Labour Minister has said the existing €12 billion borrowed from the Social Insurance Fund is expected to be repaid over a 40-year period, from 2026 to 2066, and that by then a reserve of the order of €50 billion to €60 billion is expected to have built up, a sum larger than the country’s GDP.
