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Updated: May 11, 2010 13:07 IST

Greek govt. unveils tough pension reform bill

DPA
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Prime Minister George Papandreou, left, and the Finance Minister George Papakonstantinou leave from a meeting of political party leaders held at the office of President Karolos Papoulias on Greece's debt crisis, on Monday. Photo: AP.
Prime Minister George Papandreou, left, and the Finance Minister George Papakonstantinou leave from a meeting of political party leaders held at the office of President Karolos Papoulias on Greece's debt crisis, on Monday. Photo: AP.

The Greek government on Tuesday unveiled details of a pension reform bill which seeks to revamp the country’s ailing social security system, now faltering on the brink of collapse.

The pension reform bill, approved by the cabinet on Monday night and drawn up after consultations with the European Union and International Monetary Fund, raises the retirement age for women and discourages workers from taking their pension early.

Retirees will see an average reduction in pensions of seven per cent by 2030 and will lose six per cent of their pensions for every year of early retirements that they take. In addition, pensions will correspond to no more than 65 per cent of the pensioner’s monthly salary when they were working.

“We are saving the pensions and heath care, not only of this, but also of future generations,” said Labour Minister Andreas Loverdos, adding that if the pension system was left unchanged it could cost the government up to 24 per cent of gross domestic product in 2050.

Overall, the proposals would mean that, as of 2013, everybody’s pensions would be calculated the same way, meaning that the current special benefits for certain professions would cease to exist.

The bill is due to be submitted to parliament later this week and will be voted on in June. The ruling Socialist government has a comfortable parliamentary majority.

Greece’s largest unions, which have led massive protests in recent weeks against pay and pensions cuts and consumer tax hikes, oppose the bill, saying it will place a further burden on the poor.

Unions have called for more rallies on Wednesday and have not ruled out a general strike later this week.

The pension reform bill comes on top of a list of other measures agreed upon earlier with the European Union and the International Monetary Fund (IMF).

Last week, global markets suffered big losses and the euro plunged on fears that the Greek debt crisis could spread to other weak European countries such as Portugal and Spain.

In an effort to stem the crisis, the EU and IMF on Monday spread a 750—billion—euro safety net for eurozone members that run into financial trouble, bringing to a close a frantic weekend race to find a deal before markets opened.

Separately, eurozone leaders on Saturday gave final approval for an 80—billion—euro rescue package of loans to Greece for the next three years to stave off default. The IMF also approved its part of the rescue package, a 30—billion—euro loan, on Sunday.

Greece was forced to stop borrowing from international markets after it came up against soaring interest rates. International loans became necessary to protect it against going bankrupt on May 19, when some nine billion euros in debt must be refinanced.


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