IMF Sees Fiscal Gap for Greece, Pension Cuts Might Come Sooner

The International Monetary Fund foresees a fiscal gap of 2.3 billion euros in the 2018 budget, which might mean that the pension cuts scheduled for January 1st, 2019 will be implemented earlier.

Greek finance ministry sources downplay the IMF forecast claiming that all previous predictions by the Fund, have been overly pessimistic. However, the IMF forecast might delay the third review of the bailout program, which has to be completed by the end of the year.

This generates uncertainty among pensioners who might see their pensions slashed earlier than anticipated.

Average main pension at 480 euros by 2021

Currently, one in two of the 2,650,000 Greek pensioners gets under 660 euros after taxes. By 2021, the average main pension will be 480 euros, according to Professor Emeritus at Panteion University, Savvas Rombolis.

Specifically, with the 2019 pension cuts and the reduction of state subsidies to pension funds from 18 billion euros to 12 billion, pensions will be reduced to 550 euros after taxes in 2020, and by 2021 the amount will be reduced to 480 euros net, Rombolis estimates.

Furthermore, by the year 2055, Greek pensions will see a 55% reduction. The two factors that will lead to these low pensions is, the increase in part-time work instead of full-time employment, and the aging of the population. The ratio of retired employees to the employed will shrink. This will peak in the 2020-2030 decade.

At the same time, a study by Marianna Papamichael, Vice-President of the National Actuarial Authority, entitled “Study of security fund reforms with the pension reciprocity index”, says that pensions amounting to half of paid contributions are the new painful reality for millions of insured Greeks.