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Reforming the country's ailing pension system, which Prime
Minister Alexis Tsipras has said is on the verge of collapse, is
a prerequisite for the first review of Greece's 86 billion-euro
($93.4 billion) bailout agreed in July last year.
The tough pension reforms will be a test for Tsipras' ruling
coalition, which has a majority of just three seats in
parliament, and his resolve to carry out measures demanded by
international creditors, who must sign off on the plan.
The proposed overhaul of the pension system, which has been a
drag on the budget for years, sets a ceiling of 2,300 euros on
the maximum monthly pension outlay and an upper limit of 3,000
euros for those getting more than one pension.
The plan calls for merging all six main pension funds into one
and foresees cuts in future main pensions that could reach up to
30 percent. It sets a lower limit at 384 euros per month.
The plan includes higher social security contributions for
employers and employees, by one percentage point for those paid
by employers and by 0.5 percentage point for employees.
"The government is trying to avert the collapse of the social
security system ... the opposition parties must lend support in
this national goal," said government spokeswoman Olga
Gerovassili. She blamed previous governments for drastic cuts in
benefits during the debt crisis.
"The average (monthly) pension was 1,480 euros in 2010 but ended
up at 863 euros when the (conservative) New Democracy and
(socialist) PASOK handed over the government," she said.
All parties in the political opposition object to the benefit
cuts in the plan, which has been handed over to the country's
lenders.
The overhaul, which must deliver savings worth 1 percent of
gross domestic product, or 1.8 billion euros, next year, is the
most sensitive of a raft of reforms demanded by the euro zone
and the International Monetary Fund in exchange for aid.
"We disagree with raising social security contributions," former
conservative Labour Minister Yannis Vroutsis told Skai TV. "This
would reduce growth and raise unemployment."
The government aims to submit the legislation to parliament by
mid-January and have it voted into law by early February, a
government official told Reuters, declining to be named.
Official lenders have warned that raising social security
contributions may deter job creation and set back economic
recovery, meaning negotiations before the final version of the
sweeping reform gets to parliament will be tough.
(Reporting by George Georgiopoulos and Lefteris Papadimas,
editing by Larry King)
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