The need to improve pensions is not disputed by employers; however, the OEB and KEBE are raising a number of questions regarding the financing and long-term sustainability of the pension reform.
Speaking on the Alpha News program, the Assistant Director General of the OEB, Lena Panagiotou, and the Deputy Secretary General of KEBE, Aimilios Michael, made it clear that they are seeking more information before taking a comprehensive position on the bill.
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Lena Panagiotou emphasized that the goal is not merely to increase pensions, but to ensure that the changes do not undermine the sustainability of the Social Insurance Fund or public finances. “Our concern is not whether pensions will increase, because that is what we are also seeking through this process. It is to ensure they increase in a way that does not affect either public finances or the sustainability of the system,” he said.
He also noted that contribution increases through 2039 have already been legislated and that any new burdens would affect employees, employers, and the state.
Regarding the actuarial reduction for those who choose to retire early, the OEB believes that any change should not indirectly lead to a reduction in the retirement age.
“The system cannot, through provisions that indirectly alter it, lower the retirement age threshold of 65,” noted Ms. Panagiotou. Employers are also examining the proposed easing of the actuarial reduction, pointing out that its cost and impact on the system must be clarified.
Another point of concern is the proposal to include a new category of “income earners” in the system, with income from dividends, interest, rent, or other sources. Ms. Panagiotou noted that, particularly regarding dividends, there are issues that require further examination, while Aimilios Michael argued that dividends cannot automatically be treated as wages. “The Social Security Fund operates on a proportional basis. Whatever you contribute, and whatever salary you contribute based on, your pension will be proportional,” he said, noting that care must be taken regarding how such income will be incorporated into the new framework.
Mr. Michael also raised the issue of financing the reform over the long term, expressing concerns about the Fund’s investment policy and the repayment of the state’s obligations to it. As he noted, conditions have been set for repayment, including those related to the growth rate and the level of public debt, and the necessary management mechanism must first be established. According to him, this raises questions about whether the initial estimates for the reform will hold up as presented. “The reform is being implemented to ensure continued progress and long-term sustainability. The funds that will be needed must come from somewhere,” he said.
The OEB and KEVE insist, however, that the key objectives agreed upon from the outset remain the improvement of pensions, no further increases in contributions beyond what has already been planned, and no increase in the retirement age. Ms. Panagiotou emphasized that a more detailed cost analysis and projections beyond the first few years of implementation are needed, warning that otherwise the issue of contributions may resurface in the future. “What concerns us is that after 2031, if not enough of the measures presented are implemented, we will be called upon, under the proposed bill, to discuss contribution increases,” he said. Finally, he clarified that the plan calls for pension increases, but the amount will vary by insured person, depending on their insurance and employment history.
