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Labor minister creates confusion about retirement age increase

Greece’s Deputy Minister of Labor and Social Security Panos Tsakloglou, shot a firework out of the blue about the increase of retirement age and then he gave one explanation after the other that made the issue even more complicated.

Current retirement age is at 67 or after 40 years 0f work – with exceptions for certain groups.

In interview with Mega TV on Sunday, he reassured audiences that there will be no change in the minimum retirement age for the next three years.

He noted that the law setting the minimum age for a state pension dates back to 2010 and links retirement age limits with life expectancy, while this process is reviewed every three years.

Trying to explain the situation he ended up making things even more complicated as he was not in position to add 1+1.

“We have specific laws that set out how the retirement thresholds change and what they say. They say, for example, that every three years we see what happened in the previous period, if the life expectancy has changed upwards, not the general life expectancy, the life expectancy at 65, because what the insurance system practically cares about is how many are the pensions that he has to give in the coming years so that we do not face large deficits etc. And it adapts in this way. And I have stated, what has happened is that, while when that particular 2010 law was passed – it has been respected by all the governments since 2010 – up until the time of the coronavirus we had a slight improvement, in of the coronavirus we had a setback. As a result, the life expectancy limit at 65 has not changed significantly and this is the reason why there will be no change in the pension limits for the next three years,” he said among others.

 

he added that in other countries that have such a system, “this does not change so dramatically, within three years life expectancy increases by two years to 65. The changes are small. That is, let’s say for example, if it increases by one quarter, what they take care of and do over there is that this quarter they don’t even put that sharply. Although since, always speaking, it is a mess, he puts a month in the first year and another month in the following year and another month in the year after, so that it is a smooth thing overall.”

In the end and in a series of interviews Tsakloglou said:

  • “Obviously, no one can know what will happen in 2027,” said Tsakloglou.

Why did he bring up the issue if nothing certain in 2023?

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One comment

  1. A more interesting question is how does the EFKA pension system really work?

    In the UK, for the State Pension, there is no pension pot. The National Insurance payments made by today’s workers are used to pay today’s pensions. Such a system works as long as you have an expanding demographic but fails with an aging population.

    Many people in the UK also have an occupational pension in addition to NI. The contributions they make to that scheme are invested and the money accrued is used to pay their pension.

    Does EFKA work like the first case or the second or some hybrid? If it is the former, or predominantly the former, then the rate at which the population is aging means that the Greek pension system is unsustainable.