Pension reform is a major sticking point in Greece’s bailout talks. But with 45% of retirees under the poverty line, many wonder how much more they can take

Five years ago, Sissy Vovou’s pension was €1,330 (£953) and landed in her back account 14 times a year: you used to get, she wistfully recalls, a full extra month at Christmas, plus a half each at Easter and for the summer.

Now it is a monthly €1,050 – and there are only 12 months in the Greek pensioner’s year. “In all,” she said, “I’ve lost 30% of my income. And I’m one of the lucky ones. I’m in the top fifth; 80% of Greek pensioners are worse off than me.”

Vovou, 65, who began work at 17 in the publishing industry and ended her career at the state broadcaster, ERT, is also lucky because her son, now 40, has a good job and a regular salary. She does not need to help him out.

Eleni Theodorakis, on the other hand, retired in 2008 from her job as an administrative assistant in a regional planning service, aged 55. “My pension is €942 euros a month – not too bad, really,” she said, almost shamefacedly, fishing the statement out of her handbag.

Facebook Twitter Pinterest Pensioners play backgammon in front of closed shops in Athens, Greece. Photograph: Milos Bicanski/Getty Images

“Fortunately my son is all right, just about, though sometimes he gets paid late. And once or twice, not at all. But my daughter’s husband has been unemployed for four years now. They have a baby … I give them what I can. It isn’t easy. Thankfully, my sister has a big garden. We grow things.”

There are many like Theodorakis among Greece’s 2.65 million pensioners. According to a study last year by an employer’s association, pensions are now the main – and often only – source of income for just under 49% of Greek families, compared to 36% who rely mainly on salaries.

With a jobless rate of about 26% – youth unemployment is at 50% – and out-of-work benefits of €360 a month generally paid for no longer than a year, pensions have become “a vital part of the social security net for many, many people,” said Vovou. “Retired parents are having to help their adult children everywhere. And now they’re demanding we cut them even more? It’s just so very wrong.”

Pensions have become arguably the biggest hurdle in the tortuous, on-off negotiations between the leftwing government of the prime minister, Alexis Tsipras, and Greece’s creditors: its eurozone partners, the European Central Bank and the International Monetary Fund.

Retired parents are having to help their adult children. And they’re demanding we cut them even more? It’s just wrong. Sissy Vovou

Before they will release €7.2bn in aid that Greece needs to pay public-sector salaries and pensions and repay €1.6bn in IMF loans, those lenders want further reforms to the pensions system, including penalties to put people off taking early retirement and more cuts to even the lowest pensions.

Tsipras is so far refusing to implement the measures, aimed at shaving the equivalent of 1% of GDP off the country’s pension bill, arguing they will do nothing to help Greece emerge from a slump that has seen the country’s economy shrink by 25%, and may only deepen its humanitarian crisis.

There is little doubt Greece’s pensions system needed reform. The EU’s most expensive, at about 17.5% of GDP, it was made up of more than 130 different pension funds and hid widespread abuse: a pension census ordered in 2012 as part of the country’s bailout conditions turned up more than 90,000 entirely bogus claimants – mostly the relatives of long-dead pensioners – and 350,000 more inconsistent claims.

Greece also had a remarkable 580 professions deemed hazardous or strenuous enough to qualify for early retirement: firemen and construction workers, certainly, but also hairdressers (because of the chemicals), wind instrument players (gastric reflux) and radio presenters (microbes in microphones).

But some reforms are under way: those 130 funds have shrunk to 13, the standard retirement age for men has been lifted to 67, and, above all, since 2010 public and private sector pensions have been severely pruned, on a scale ranging from a 15%-cut for the very lowest (under €500 a month) to as much as 44% for highest (more than €3,000).

Facebook Twitter Pinterest Greek pensioners protest against pension cuts and healthcare access in Thessaloniki. Photograph: Alexandros Michailidis/Demotix/Corbis

Greek pensions are now, on the whole, far from exorbitant: social security ministry figures show the average main pension is €713 a month, and the average top-up pension – typically funded by an industry retirement scheme – €169 per month. Some 60% of pensioners get less than €800 gross a month, and 45% live on less than the monthly poverty limit of €665.

The problems the system faces now are closely related to the country’s particular plight – and Athens is not alone in arguing that further flat, across-the-board pension cuts of the kind envisaged by its creditors are unlikely to accomplish much beyond hurting pensioners even more.

The record-high unemployment rate, for example, means the pensions system is running a big deficit: contributions coming in are forecast, this year, to be roughly €2bn less than benefits going out.

That shortfall has widened further because of the large number of older Greek workers seeking early retirement: demand is up 14% in the private sector and 48% in the public sector since 2009.

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With unemployment among the over-55s at about 20%, compared to just 6% five years ago, “I felt it was the wisest thing to do,” said Ioannis Konstatinidis, who retired four years early from a large, now privatised bank in 2012.

“People were losing their jobs, salaries were being cut, and there was so much uncertainty I just thought it was better to be sure of getting at least something.” Konstatinidis has ended up getting nearly 40% less than he had counted on, however. “Our retirement will not be quite as comfortable as we’d thought. But we’re luckier than lots of people.”

They are. Among the pension cuts being proposed is the abolition of the EKAS, a variable supplementary payment made to nearly 200,000 Greek pensioners to bring their monthly income up to €700 a month. (Other suggestions made by Greece’s creditors would hit people like that particularly hard: a hike in the tax on electricity, for example, from 13% to 23%).

Few Greeks think further pension cuts will achieve anything. They may also be illegal: the country’s highest court has already ruled that the private-sector pension cuts pushed through in 2012 were unlawful because they “deprived pensioners of the right to decent life”.

Unsurprisingly, the country’s pensioners’ unions have called for a major demonstration against further cuts on 23 June. “The government must absolutely not give in,” said Anastassios Georgiadis, of the retired postal workers’ association. “And Europe has to understand that it is not by making us even poorer that Greece will emerge from this crisis.”



