Greek workers set to work longer for smaller pensions

The Greek parliament has voted through changes to the country’s pensions system, which mean public sector workers will have to work longer for lower pensions. This is despite general strikes called by Greece’s two main union confederations.

The changes are part of an austerity package agreed with the International Monetary Fund and the European Commission in return for emergency loans in May (see Labour Research June 2010, page 13). They equalise the retirement age for women in the public sector. But whereas women can currently retire at 60 and men at 65, the changes set the retirement age for both sexes at 61 in 2011, 63 in 2012 and 65 in 2013.

From 2015 employees will have to have 40 years of contributions to receive a full pension rather than the present 35 or 37 years. And fewer employees will be entitled to early retirement on the basis of the arduous nature of their work. The government’s intention is that the actual average retirement age should rise from 61.4 years to 63.5 years by 2015.

In addition, the legislation cuts the value of pensions, with the current Christmas and summer bonuses being replaced with a flat-rate payment and a freeze on pensions from 2011 to 2013.

Longer-term, pensions will be based on average lifetime earnings rather than the best five years in the last 10 and the accrual rate is cut from 2.0% to 1.2%.