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Greece's pension reform may hurt future pensioners: expert

Xinhua, January 19, 2016 Adjust font size:

Greece's pension system reform could be unfair to future pensioners, a Greek expert told Xinhua in a recent interview, suggesting alternative solutions to the thorny issue.

"What is happening today is that we are protecting the older generations at the expense of the taxes paid by young workers today," Giorgos Stamboulis, a lecturer at the University of Thessaly in central Greece said.

Stamboulis noted that the current pension system with a "pay as you go" rationale has led to a vicious circle, in which huge gaps exist between different categories of pensioners. "Someone may be receiving less than 400 euros per month, while another a triple amount," he said.

Greece's pension system overhaul is one of the "hot potatoes" for the left-led government in the negotiations with the country's international lenders at the start of the new year.

The government has warned that without radical changes, which could inevitably lead to pension cuts and increase of contributions, the country may not be able to cover around 2.6 million pensioners next year.

However, Stamboulis warned of the catastrophic results that could be caused by the reform. "The rising of contributions will increase undeclared labor and unemployment," he said.

Instead, the expert suggested a pension reform based on the models of New Zealand and Ireland.

The expert suggested that the state cover the pension spending and invest the amount raised from monthly contributions in job creations, so that more people will enter the labor market supporting the development of the economy.

The fundamental principle of this alternative model is that retirement should not be viewed as a private affair of each individual, but as a collective challenge.

In order to achieve the goal, he noted, today's high earning pensioners should make some sacrifices so that their children and grandchildren can get decent pensions.

The Greek government has been facing a series of protests almost on a daily basis lately over its pension reform proposal, which will be put to vote in parliament in early February, according to the updated time schedule. Endi