In 2010, Greece, under the pressure of an increasing public debt, was forced to resort to the Troika, which is the designation of the triumvirate comprising the European Commission (EC), the European Central Bank (ECB), and the International Monetary Fund (IMF). The Troika agreed to provide Greece with financial help, on special terms recorded in a Memorandum of Understanding (MoU) between the Greek Government and the Troika. One of the most important reforms recorded in the MoU is the Pension Reform since the Greek Social Security System had long showed signs of unsustainability and insolvency. The reforms implemented had a great positive impact on pension expenditure, which was drastically reduced when projected until 2060. The projected reduction, taking into account all reforms from 2009 to 2015, exceeds 14 percent of GDP. These fiscal changes are expected to take place under extreme demographic pressure, with both the total population and the working population projected to decline by a good 20 percent and 36 percent respectively, while at the same time pensioners are projected to increase by as much as 30 percent. Replacement rates were drastically reduced by 40 percent for high earners according to the OECD, while the average contribution period is projected to increase by at least seven years until 2060, reaching almost 38 years in total. Along with fiscal and demographic effects, one has to also take into account the vicious circle of recession created in the Greek economy. Such was the latter, that one third of contributions were lost in the respective era bringing the amount of contributions to 12 billion euros yearly as opposed to 18 billion euros before the crisis, while at the same time pension expenditure exceeds 24 billion euros yearly. The recession also caused further impoverishment of old-age people followed by the rest of the population. And this became one of the main reasons that the reforms could not be fully implemented for fear of further impoverishment of pensioners and social exclusion in general, as well as political cost that is always a key factor. This paper aims to further analyze and present the impact of the reforms on the Greek pension system and the people who rely on it through an actuarial-statistical analysis and point out the changes in the main factors mentioned above and how they correlate.
Ιmplicit pension debt is attracting increasing attention worldwide as a driver of fiscal dynamics, operating in parallel to the (explicit) National Debt. A prudent examination of a state’s fiscal prospects should ideally encompass both, with due attention paid to the special features of each kind of debt. The explosion of government deficits as a result of the COVID-19 pandemic only adds to the urgency of understanding the scale and nature of issues around accounting for contingent liabilities. The reports of the EU Ageing working group, produced and published every three years are used to derive estimates of the stock of outstanding implicit pension debt from flows of projected deficits. This can be performed for all European member states. This paper uses the last two rounds of the Ageing Report (2021, 2018) and derives conclusions on the evolution of pension debt and its correlation to the external debt. The paper concludes that producing comparable estimates of IPD should become an important input in EU policy discussion.
In an extremely turbulent fiscal situation, Greece has received financial help three times between 2010 and 2015. The Greek people have had a very large percentage of the income reduced since 2009, and have had to adapt very quickly to a new reality. This paper aims to shed light on the financial choices the Greek people made and to examine how well they can respond to urgent financial needs in a time when the Greek society has shifted towards poverty.
Keywords: Financial literacy, Greek economy, Greek debt crisis.
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