Greece looks at pension reforms to bridge differences with creditors

Greece looks at pension reforms to bridge differences with creditors

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The government is seeking alternative solutions to cover the fiscal gap worth 550 mln euros following creditors rejection of a previous proposal. Labor Minister George Katrougalos is meeting with lenders mission chiefs from the European Commission, European Central Bank, European Stability Mechanism and International Monetary Fund at 4.30 p.m. on Wednesday.

Each of the Greek proposals will be carefully scrutinized and double-checked to ensure that they are in accordance with actuarial studies so as to ensure their viability so as to ensure that the Katrougalos Law would still ensure that pension expenditure is limited to 1% of the GDP in 2016 (1.8 bln euros) and 1.5% by the end of 2019.

Mission chiefs appear certain that the figures just don’t add up with the reform and are on a quest to prove this so that additional measures are taken.

On Tuesday they did not demand a haircut to main pensions, but they looked through the agenda of various issues without exerting pressure.

If reductions are requested, the government will respond with new proposals so as to achieve a compromise solution.

The differences between two sides are the following:

* Creditors want a reduction to high replacement rates for the calculation of new pensions with 15-25 years of insurance.

* Creditors are demanding that the national pension be given after 20 years of insurance instead of 15, while insisting on the introduction of income criteria for this. In recent meetings they characterized lump sum retirement packages as a “luxury” that the current Greek economy cannot support.

* Creditors reject the proposal for increased contributions by 1.5% as they believe this would thwart the competitiveness of businesses.

* Creditors want sweeping cuts and deny the existence of personal differences that can occur from the recalculation of pension payments.

* They want to apply the zero deficit clause to supplementary pensions. The Greek side proposed the use of property of the EBRD to cover deficits.


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