The debate on pension reform entered a critical phase on Friday, with the meeting of the Technical Committee and the Labor Advisory Council lasting more than 4.5 hours. In statements made after the meeting, employers expressed concern about “loopholes” that leave open the possibility of future contribution increases, while union representatives expressed concern about the proposed income levels for low-income pensioners, which remain below the poverty line. 

In remarks made after the marathon meeting concluded, the Minister of Labor and Social Insurance, Marinos Mousiouttas, said that “the discussion went into depth,” particularly on issues related to Pillar One, concerning pension increases.

“Questions were raised, clarifications were sought, and suggestions were made,” said the Minister, noting that it was decided to hold meetings twice a week, “so that we can address all the issues as quickly as possible.”

Prior to the meeting of the Labor Advisory Body, the Technical Committee on Pillar 0—the government’s social policy for low-income pensioners—met. Following the actuary’s presentation, the Advisory Council’s discussion next Monday will focus on this issue, the minister said.

As Mr. Mousiouttas clarified, the “small allowance” will continue to exist, since “social welfare from the state will continue for those who meet the criteria to be determined.” He clarified, however, that as pensions increase, the need for social policy from the state decreases, emphasizing that under no circumstances will any retiree receive less overall than they do today.

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At next Thursday’s meeting, the 12% actuarial reduction and other issues that arise will be discussed, he added.

“The Ministry’s unwavering goal remains that the pension reform should be implemented on January 1, 2027, so that our retirees can enjoy the benefits of the reform on February 1, 2027,” he said.

Regarding the repayment of the TKA’s debt and the transfer of the Fund’s surpluses each year to the new Fund to be established, Mr. Mousiouttas said that the Minister of Finance or his representative is expected to attend a future meeting, during which the Fund’s investment policy will also be discussed, with the aim, as he put it, to begin, with the assistance of the IOC, the debate on the bill for the second pillar this coming September.

“I believe the discussion was quite constructive,” he said, adding that in a spirit of cooperation and mutual understanding “we will be able to achieve our common goal: to implement the pension reform in all its stages as soon as possible.”

When asked about the issues raised during today’s meeting, the Minister referred to the 12% actuarial reduction, noting that technical explanations were requested regarding how, by how much, and over what period pensions would increase; questions were raised regarding investment policy; and the issue of returning funds to the Social Security Fund was also discussed.

When asked whether answers had been provided regarding the cost of the reform, the Minister replied in the negative, noting that the calculation of the cost took into account the sustainability of the TKA and the sustainability of public finances. “We had said during the session that we would prefer the relevant Ministry to make this presentation—either the Minister or a representative—at one of the next few sessions,” he said.

The Minister clarified, however, that any changes proposed by the social partners would have to be accompanied by a proposal to reduce costs elsewhere. “But we haven’t reached that point yet,” he said.

When asked whether the deadline set for submitting the bill to the full House of Representatives on September 24 is still considered feasible, based on the agreed-upon meeting schedule, Mr. Mousiouttas said that “as we move forward and discuss the matter, it will become clear from the upcoming sessions. With good will, I don’t see why we shouldn’t be able to move forward.”

Meanwhile, he noted that meetings of the Technical Committee on Provident Funds have been scheduled for September 1 and September 15. “If it becomes clear at the September 1 meeting that more sessions are needed, we are all willing to hold them,” he said, adding that “there is no one who does not want this reform to move forward as soon as possible.”

The OEB sees room for a future increase in contributions

The General Director of the OEB, Michalis Antoniou, said that the discussion was “very productive” and that several points were clarified. “We are optimistic that the necessary common ground will be found so that a bill can be submitted to Parliament with as few discrepancies and disagreements as possible.”

As he noted, the second and third readings of the bill have revealed some troubling aspects. “One of the points we all agreed on when we began is that the effort to improve the pension system would not lead to an increase in contributions. The bill includes a provision that an actuarial study will be conducted in 2030–2031, which will determine whether sustainability is ensured without raising contributions, leaving that possibility open,” he noted.

Mr. Antoniou expressed the hope that, with the help of experts, the final texts will not contain “unrealistic assumptions,” in order to improve pensions without raising contributions or reducing existing or expected pensions, noting that this “is within our capabilities.”

Regarding Provident Funds, Mr. Antoniou reiterated the “clear position of the OEB” that Provident Funds exist and operate, covering 25% of private-sector employees, on a voluntary basis. “That’s how we built them, that’s how we’ve operated them, that’s how we’ve come to know them, and that’s how they will remain,” he said.

For his part, the Secretary General of KEVE, Philokypros Rousounidis, said it was a “constructive and lively” discussion. “Several questions and concerns were raised that had arisen after an initial reading of the text we received last week,” he said, noting that while some points raised further questions, others were answered.

“The timeframe that has been set is an optimistic scenario,” he said, noting that “we will strive to honor it, while also heeding our fellow citizens’ anxiety regarding this long-awaited reform, which we hope will ultimately prove to be socially just, but, at the same time, will not adversely affect public finances from a macroeconomic perspective and will ensure the Fund’s sustainability,” he said.

Unions Say Proposal for Low-Income Retirees Falls Below the Poverty Line

The General Secretary of PEO, Sotiroula Charalambous, said that for the reform to be comprehensive, it must address “the most fundamental problem”—the existence of pensioners living below the poverty line. “We are concerned that the plan for Pillar 0 is detached from the poverty line,” as measured by the EU, she said.

As she clarified, the poverty line is set at €1,018, while the Ministry’s proposal amounts to a total income of €900, up from the current €794. Ms. Charalambous requested the actuaries’ analysis explaining how this amount was arrived at. “We are thus acknowledging that even with the reform, there will continue to be retirees whose total income will be below the poverty line,” she noted.

Regarding Pillar 1, Ms. Charalambous welcomed the upcoming discussion on the 12% reduction, noting that the provision in the bill is unsatisfactory. “We are ready to engage in a constructive discussion on this issue, with the key point being that any relief must cover the entire actuarial reduction, not just a portion of it,” she said.

She also emphasized the importance of the political commitment that the reform will not result in future retirees receiving a smaller pension than they would under the current system.

Regarding the cost of the reform, Ms. Charalambous said that “we are waiting for the Ministry of Finance to provide the figures” and to specify which portion of the reform will be funded by the Social Insurance Fund’s own resources and which portion by the state budget. As she explained, at this time, there are €180 million in the state budget allocated for social pensions, the low-income pensioners’ plan, and support for basic pensions.

She also added that everything that has been discussed regarding the repayment of the TKA’s debt must be set out in a clear framework.

Regarding the Provident Funds, Ms. Charalambous said that the labor movement will not stand in the way of the bill’s passage. “It is important, however, since the primary goal of the reform is income adequacy,” that there be a roadmap leading us to where we need to be: every worker, in addition to their pension, should also have a Provident Fund.”

Regarding the widow’s pension for men, the Secretary General of PEO raised the issue of discrimination that must be resolved. “A reform cannot leave such issues behind,” she said.

The General Secretary of SEK, Andreas Matsas, said that the goal is to ensure adequate pensions for current and future retirees, to ensure there is no risk of reduced pension benefits, and to prevent any increase in the retirement age or in contribution rates. “The more targeted our approach to the bill is, the easier it becomes to ensure these parameters,” he said.

“For SEK, it is non-negotiable: we will not accept any downward adjustment of pension benefits. We will not accept the creation of risks for future retirees. We will strive to ensure that the issue of the 12% adjustment can be adequately addressed.”

He added that the goal is also to support widowed retirees whose spouses passed away before 2018.

“A necessary prerequisite for a comprehensive pension reform is to link this effort to the second pillar, the Provident Funds,” he added.

When asked about the labor movement’s “red lines,” he said that matters of principle are not up for discussion. “The goal is adequate pensions. We are undertaking a reform process, so it cannot be piecemeal. It must yield results that benefit all retirees.”

“Without the second pillar, the goal of adequate pensions is not achievable for us. We will not obstruct the process, but we do not want to relinquish our role as social partners by handing the reins over to the parliamentary parties. “We will strive, within the time we have available, to create the conditions for a comprehensive plan,” he said.

For his part, the President of DEOK, Stelios Christodoulou, said that the process of submitting clarifications on the bill is underway, and that the partners will submit their positions in the near future. “We will eventually turn to our collective bodies to reach a final position,” he said.

As he noted, it must be clarified what the adequacy of pensions should be today and what it should be for future generations, in order to ensure proper provision.

“What will add value is not the redistribution of resources within the Social Security Fund, but the state’s additional contribution and the second pension pillar. Provident Funds must be mandatory and should be implemented as soon as possible so that, in twenty years when they mature, they will meet the needs of future retirees,” he noted.

He added that the government’s stance on the issue of pension funds is also important. “If the government shares this policy and the positions we hold as a labor movement, it must take the appropriate actions and steps,” he said, referring to subsidies needed to ensure the universal implementation of the Provident Funds system.

In conclusion, he noted that those with incomes below €19,500—who are “those who needed it most,” and this reform must take them into account, he said.

PASYDY Secretary General Stratis Matthaiou expressed the organization’s long-standing position that the pension of any current or future retiree should not be reduced compared to what they would expect under the current system.

Mr. Matthaiou said he raised the issue of workers who are required to retire before the age of 63, such as police officers, firefighters, and military personnel. “We believe that they have no choice, so it is unfair to impose penalties on them,” he said.

Source: KYPE