May 10 (Reuters) - Greece’s government approved on Monday a bill aimed at reforming the country’s ailing social security system, which is expected to go bust in less than 15 years if left unrepaired. (For story, click on [ID:nLDE6492MV])
The reform is key for the consolidation of public finances as Greece battles a debt crisis that has shaken the euro zone.
Here are some key facts on the latest pension reform:
- The statutory retirement age for women will be raised by five years to 65 immediately to match the current retirement age for men. The statutory retirement age for men and women will be revised in 2020 to reflect changes in life expectancy.
- From 2014, pension benefits will be linked to GDP fluctuations and the financial situation of pension funds.
- The government will introduce financial penalties and disincentives for early retirement, aiming to raise the effective average retirement age to 63.5 years by 2015 from 61.4 now.
- Early retirement below the age of 60 will be curtailed. Employees can currently draw a pension below that age if they have paid contributions for a certain number of years or have children under 18.
- The government will review its list of “arduous” professions, in which workers are entitled to special allowances and can retire earlier than normal.
- It will also review terms and conditions governing diability pensions and crack down on abuse.
- The 13 separate state-run pension funds will be reduced to three by 2018 to generate savings.
- Unmarried or divorced daughters of civil servants, banking employees and military staff will no longer be entitled to their deceased parents’ pensions above the age of 18.
- Pension benefits will be reduced by basing them on pensioners’ average pay over their working lives rather than their final salary, which is usually much higher.
- The government has said it will freeze pensions in 2010, 2011 and 2012.
- Easter, Christmas and summer bonuses will be reduced for pensioners receiving less than 2,500 euros a month and abolished for those earning more.
- Those drawing a pension of more than 1,400 euros a month will be subject to an extra tax ranging between 5 and 10 percent.
- The three above measures will generate savings totalling some 3 billion euros by 2013, the government says.
Greece’s pension system, a political hot potato, has an actuarial deficit estimated at about twice the size of the country’s GDP of 240 billion euros ($322 billion).
The latest pension reform will be fully implemented in 2018 and the government has said it will guarantee the social security system’s viability until at least 2030. (Reporting by Renee Maltezou, editing by Tim Pearce)