Coalition seeks final policy mix

Reducing pensions under 600 euros and forcing those who are eligible for retirement next year or in 2013 to work an extra year are among the measures the government is considering in order to complete the 11.5 billion euros of cuts that it will have to present to troika officials when they return to Athens on August 27. Finance Minister Yannis Stournaras is due to meet the representatives of the European Central Bank, European Commission and International Monetary Fund on Sunday, ahead of their departure from Greece. By the time they return, the coalition government will have to finalize the package of cuts, which Stournaras and Prime Minister Antonis Samaras sees as vital to earning a positive review from the troika in September and convincing Greece’s eurozone partners to continue with the bailout.

Samaras is due to discuss the measures, as well as the government’s bid to speed up the privatization process, with his coalition partners -- PASOK’s Evangelos Venizelos and Fotis Kouvelis of Democratic Left -- during a meeting on Monday.

Although Kouvelis and Venizelos have agreed in principle to the cuts, finalizing the details could yet prove difficult.
Sunday’s Kathimerini understands the coalition will abandon its intention to raise the retirement age from 65 to 67, although this would have saved 1 billion euros, and instead remove the adjustment period introduced in the 2010 pension reform. This would mean that nobody could retire under the age of 65 from next year.

Also, government officials have decided against cutting just pensions above 1,400 euros, which form the minority of retirement payments in Greece, but to reduce all pensions by about 5 to 6 percent. This would mean that someone earning a pension of 700 euros would lose about 35 euros per month.

Sources said the switch is a result of cuts to large pensions not providing enough savings. The ceiling for the combined total of basic and supplementary pensions is currently 3,690 euros. Lowering it to 2,500 would only save 25 million euros. There is also concern that the reduction would be successfully challenged in court.

Agreeing the details of the 2013-14 cuts is one of the goals the government is aiming to achieve in the next few weeks to secure a positive review. The other two are implementing the 3 billion euros in fiscal measures due this year and moving forward with structural reforms and privatizations.


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