Greece should consider defined contribution (DC) pensions as part of overall retirement provision now that the foundations of its crisis-driven pensions reform have been laid, according to Greek actuaries.

In a paper on the Greek pension reform strategy undertaken by the government between 2010 and 2014, Georgios Symeonidis, executive board member of the Hellenic Actuarial Authority (HAA), said this would let people organise their lives better.

Symeonidis said: “It is now time for the government to distinguish between welfare and pension, to educate people on the demographic developments and the utmost importance these play on their pension income when they retire in a few decades.

In the paper for presentation at the International Actuarial Association Colloquium in Oslo, he added: “Moreover, DC systems should be taken into consideration by the Greek people when allocating money for third age income as they are by many other Europeans.”

This did not mean that the existing safety nets should be abolished, but rather that people should be given incentives to invest part of their third-age income into a different kind of system. 

“This also increases risk spreading and allows people to organise their lives in a much better way,” Symeonidis said.

He said that over the last few years, Greece had come a long way towards laying the groundwork for more sustainable pensions, not only in limiting the superfluous, but also in sacrificing part of what was essential.

It had been necessary for Greece to make these changes quickly to avoid bankruptcy, he said.

“However, since real people lie behind the numbers, it is vital that adequacy is also guaranteed, so that the people reaching the third age are able to manage with integrity and pride,” he said.

In 2010, Greece, under the pressure of mounting public debt, was forced to resort to the tripartite committee referred to as the Troika of the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF).

The Troika agreed to provide Greece with financial help, on special terms recorded in a Memorandum of Understanding (MoU) between it and the Greek government.

Symeonidis said the pension reform had been one of the most important reforms recorded in the MoU, because the Greek Social Security System had long showed signs of unsustainability and insolvency.

He said the reforms had not yet finished, and that it was in any case impossible to reform a system in four years, when nothing had been changed for decades. 

“The administrative changes have been colossal and the way the social security system is now organised is light years ahead of what it was just a few years ago,” he said, noting that a full system record had now been established.

“Based on these analytical data, the actuarial valuations provided by the HAA are now more detailed and involve less uncertainty and a reduced margin of error,” he said.