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The pensions dilemma facing Greece

Wednesday, June 17, 2015 - 02:14

One of the key sticking points in a deal between Greece and its lenders is pensions. Hayley Platt looks at the reasons why Athens is so reluctant to reduce them.

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Athens residents frequently turn out in their thousands to protest about their plight. And at last week's gathering many of those taking part were pensioners, like 63-year-old Costas Maglaras. (SOUNDBITE)(Greek) PENSIONER COSTAS MAGLARAS, AGED 63, SAYING: "They cut our salaries and pensions in half. With a small pension we are now supporting our unemployed children and their families." Greece's pension commitment has been a key sticking point in aid-for-reform talks. To the lenders the system is too generous in the circumstances. It's three times higher as a proportion than Germany's and on average men retire at 63 and women at 59. Eurostat figures show Greece spent 17.5 percent of its economic output on pensions in 2012 - more than any other EU country. That's since been reduced - but only to 16 percent. And many Greeks can still retire early, particularly those in the public sector. Fofi Gennimata - who became the leader of the opposition PASOK party last week - is a former bank clerk. The mother-of-three applied for a pension last year aged just 51. Her office says she stopped taking it when she became an MP. J.P. Morgan's Kerry Craig says the lenders do recognise she's not representative. SOUNDBITE: Kerry Craig, Global Market Strategist, J.P. Morgan Asset Management, saying (English): "You do need to look after the sick section of the population and perhaps what they have had in the past has been very generous but at the same time these people do need to be able to live." But state wages and pensions reportedly account for 80 percent of primary state spending, before debt servicing costs. And the remaining 20 percent has already been cut to the bone. Achieving a primary surplus without touching pensions is a challenge. SOUNDBITE: Kerry Craig, Global Market Strategist, J.P. Morgan Asset Management, saying (English): " The fact is that those surplus targets have come closer into line between what Greece was asking for and what the lenders were originally asking for but there is still a gap there." Greece has statistics to back up its case too of course. Unions say the average pension has been cut over the past six years from 1,350 euros to 833. And 45 percent receive benefits below the poverty line of 665 euros.

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The pensions dilemma facing Greece

Wednesday, June 17, 2015 - 02:14