Greek pension reform 'urgent' - OECD
GREECE - Pension expenditure is set to grow to one-fifth of Greece's GDP by 2050, the OECD warns.
This is a higher amount than for any other country in the Organisation for Economic Cooperation and Development (OECD), the body noted in its latest economic survey on Greece.
One of the major problems identified in the report is a lack of disincentives for early retirement. The authors state a cut in pension benefits from the first pillar will be necessary in order to make the system sustainable. But they suggest to soften the blow by curtailing " the many alternative early retirement pathways".
Greece currently has the highest replacement rate among all 30 OECD members. Average earners can expect their post-tax pension to be worth over 120% of their earnings. In comparison, in the UK, which comes last in this statistics, this figure is only around 40%.
At the presentation of the report in Athens, Greek economy and finance minister George Alogoskoufis said the government had a clear strategy on a pension reform. Plans will be presented later this year.
Pensions will be a key issue in the election campaigns for the polls in March. However, the OECD pointed out that "the public still needs to be convinced of the required deep reform of the pension system that constitutes a sine qua non for achieving sustainable fiscal policy".
Meanwhile, all four pension funds involved in a disputed bond purchase have announced they will negotiate reselling it to JP Morgan.
JP Morgan had offered last week to buy back a €280m bond it had underwritten for the Greek government. Passing through various brokers the state controlled pension funds the Pharmaceutical Workers' Auxiliary Pension Fund (TEAYFE) and the Social Insurance Workers' Auxiliary Pension Fund (TEAPOKA), the Newspaper Sellers' Pension Fund (TSEYP) and the Civil Servants' Auxiliary Pension Fund (TEADY), have allegedly paid €5m too much for the bond.
All four decided to accept JPMorgans offer just hours before the deadline runs out tomorrow.