The government has been forced to scale back its ambitious timetable for pension reform. The submission of the bill has been postponed to September from July, while the possibility of extending the reform to include the second pillar, provident funds, is now on the table, with any related measures not expected to be implemented immediately. The first pillar, namely reform of the Social Insurance Fund, remains the priority.
This shift in strategy and approach is the result of demands by social partners for a comprehensive pension reform aimed at strengthening adequacy, as well as strong reactions over tight deadlines. It is recalled that the Labour Minister had set a target to submit the bill before parliament closes in July.
The pension reform is expected to be even more difficult and complex than the tax reform, both in terms of its design and its implementation. Major concern has been raised over how increases in pensions will be funded to ensure the sustainability of the Social Insurance Fund.
Following Monday’s meeting of the Labour Advisory Body, Labour Minister Marinos Mousiouttas explained that the goal of submitting the pension reform bill to parliament has been moved to September, instead of July, in order to allow more time for discussion with social partners.
Mousiouttas said that despite initial plans, the draft legislation was ultimately not handed over to the partners. “Listening and reconsidering their views that more time should be given for dialogue before anything is formalised by a Cabinet decision, we changed course,” he noted.
“We said that over the summer we will present the draft legislation to the social partners, we will hold discussions, and the ultimate goal is that in September, when parliament reopens, we can submit the outcome of those discussions, whether that is what we currently have, something entirely different, or including certain proposals that will be adopted. Then discussions will proceed with the parliamentary parties in the competent committee,” he added.
The issues
According to Mousiouttas, the draft bill will be given to social partners in the coming days along with a summary of key issues raised during the meeting, including the 12% actuarial reduction, “so they can study them and return in subsequent sessions to examine each issue in detail within the Labour Advisory Body.”
He said that both the summary “on all key points and the draft legislation” will be provided to initiate consultation, noting that the overall framework is already set.
“We will not wait for unanimity in order to proceed. The sincere effort will be to achieve as many convergences as possible, ideally on all issues, so that we can move forward,” he stressed.
At the same time, he noted that “technical committees will analyse the technical aspects in depth, so we can identify areas of agreement and move forward, while discussions will take place where differences exist, to examine whether any changes are possible compared to the proposals included in the legislation.”
“Any change that is made must also be accompanied, and this is our philosophy, by a corresponding reduction in another area,” he said.
“The funds of the Social Insurance Fund are specific, and we will demonstrate that they are specific. Therefore, anything that is requested to be added to the bill must also be accompanied by a way of implementing it without increasing contributions and without changing the retirement age. We need to see how the demands of one side can be balanced with adjustments elsewhere,” he added.
“If there is something that can be implemented, we have no problem adopting it, provided it does not undermine the sustainability of the Social Insurance Fund,” he noted.
Provident funds
Regarding the second pillar, the Labour Minister said it was clear during the meeting that “there is a divergence of views”, adding that “we will make every effort, as far as possible, to bring this issue together with the main bill as an agreed position to parliament.”
Trade unions are pushing for mandatory provident funds, while employers insist that any regulation should remain voluntary.
According to the minister, the bill for the second pillar “cannot be submitted to parliament in September,” as “it will require two to three years.”
Political backing
The partners’ demand for a comprehensive reform also received political backing. DISY president Annita Demetriou, after meeting with the leadership of SEK, said there is a shared goal of increasing low and middle pensions, while maintaining work incentives within a framework of fairness and proportionality based on contributions.
She stressed that the reform must be comprehensive, “including the second pillar, which is necessary to ensure pension adequacy and a dignified standard of living for retirees.”
“There is still much to be done. There are many details that need to be worked out and we want the best possible outcome. The Democratic Rally considers this a top priority. Citizens expect it, and a comprehensive plan must be submitted to ensure that those in need can benefit. We must ensure a system that works for all employees,” Demetriou said.
SEK secretary general Andreas Matsas said that “SEK and the trade union movement have provided the flexibility for a comprehensive reform to be designed, even if it is later confirmed that different timelines may be needed for implementing its components.”
According to Politis information, another meeting of the Labour Advisory Body is expected to be convened towards the end of next week, where, depending on the progress of discussions, a regular schedule of meetings will be set.
