GREECE - Proposed reforms to the Greek pensions system will do little to alter the status quo or improve the funding of domestic pensions, as little true change is being introduced, according to pensions experts.

The Greek government last week secured approval for its pensions reform bill after three days of discussion in parliament, but there has been substantial public opposition and widespread strikes in recent months as a result of the government's proposed reform of the pension system.

The ministry of finance announced in November it would merge 133 pensions organisations into just 13 - 110 of these are supplementary pension funds being folded into just six new vehicles.

However, many of these well-funded schemes are then being used to finance the poorly-funded plans, according to pensions experts, and a handful of the poorly-funded pension schemes were this month found to be unable to pay their members' benefits.

Andreas Panatioutou, group pensions manager for corporate pension plans at Interamerican, told IPE further real reforms need to be introduced for the Greek population as there are no actual detail to show how reforms will improve occupational and supplementary pensions management, and boost members retirement incomes in turn.

"Nobody really believes things are going to be improved," said Panatioutou.

"The government has not set out the infrastructure for this merger of funds and this is often the problem in Greece. Whatever our governments are doing, they do not set up the framework and don't appear to care how they are to going to operate. What they are going to try and do is use the assets of the healthy funds to pay the benefits for the inefficient funds."

He continued: "These are not reforms in the way they were seen in Eastern Europe, for example. This is just decorative and nobody expects it to make a difference. But we need real [pensions] reform, as seen in Eastern Europe. This is an opportunity."

The European Commission recently "invited" Greece, in its latest assessment of economic and budgetary stability of countries in the period 2007-10, to improve its pensions system after describing the country as being high risk in terms of budgetary controls because of its ageing population.

More specifically, the EC suggested Greece update long-term projections for age-related expenditure "as soon as possible" and to "improve the long-term sustainability of public finances" by "reforming the pensions system". (See earlier IPE story: EC invites Greece and Ireland to speed up reforms)

The Bank of Greece also said in January "early and major pension reform" was vital to the long-term economic stability of Greece. (See earlier IPE story: Bank of Greece urges reform to protect public services)

However, the only true occupational pension plans in Greece receiving positive member interest, according to Panatioutou, are the group pension plans implemented by multi-national firms on behalf of their employees, albeit, these are still of little interest to the local Greek market.

Initial occupational pensions legislation was introduced in 2003, but no further information concerning how they should be run has ever been set down, and there are currently no requirements as to the level of knowledge officials running existing pensions plans are run - an issue Panatioutou also believes should be rectified with increased regulation and standards rather what he considers to be politically-motivated pensions moves and management.

"The occupational pension funds could be a solution to the Greek pensions problem. But we have had legislation since 2003 which describes nothing," said Panatioutou.

"And people in charge of these funds are only there for a short time, so there is no continuity. When the government changes, all of the pensions people change. They are not people who know how to manage pensions, as they are not experts," he added.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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