3 ms·

The pension situation is interesting. First of all, let's look at the average retirement age, there's a useful graph here: http://www.bbc.co.uk/news/world-euro

The pension situation is interesting. First of all, let's look at the average retirement age, there's a useful graph here: http://www.bbc.co.uk/news/world-europe-31803814 http://www.bbc.co.uk/news/world-europe-31803814 As you can see, whist the average retirement age is lower than average, they're not that different from the average. So you have the Greeks retiring at 57.8 and the British retiring at 58.3, not that different. Secondly, talking about the average Greek pension payment is €713, and 45% of Greek pensioners live below the poverty line. http://www.theguardian.com/world/2015/jun/17/greece-pension-crisis-people http://www.theguardian.com/world/2015/jun/17/greece-pension-... Lastly, costs of pensions is an issue for many countries, as we all live longer (on average). The most straightforward solution is to raise the retirement age, and I fully expect that to happen in Greece.

tptacek 11y ago
You can't quote the retirement age in isolation. You also have to capture the replacement rate, the percentage of the pensioners salary paid out by the plan. That rate usually changes as employers age, so that early retirees replace significantly less of their salary through pensions. The UK, not surprisingly has apparently one of the lowest replacement rates in the world, even for people with full pensions. Greece has one of the highest, and was (at least prior to reforms, some of which may have grandfather clauses) notorious for generous replacement plans for early retirees. Again: these aren't value judgements about Greek citizens. They're assessments of the sustainability of Greece's pension obligations. Greece spends an anomalously high percentage of its GDP on its pensions.
- ZenoArrow 11y ago
  So what do you propose? How would you fix it? As far as I can see, if you've already got nearly half of your pensioners living below the poverty line, the answer is not more cuts to their payouts. With unemployment at approximately 25% there are many people who can't save money to supplement their pension, plus right now we need Greeks to invest in their own future rather than save. The only solutions I see for the Greeks (if they stay in the Euro) are to stimulate growth and raise the retirement age. Do you agree, or do you see it differently?
  - tptacek 11y ago
    Ultimately, you can only make the pension payments you can actually afford. Regardless of the standard of living of Greek pensioners, they can't make up money out of thin air to pay them. Something has to give. Usually, that means raising taxes on young workers. But in Greece's case, that's problematic for other reasons.
    - ZenoArrow 11y ago
      Sure, you can only make the pension payments you can afford, but if a high proportion of Greek pensioners are already struggling (nearly half), wouldn't it be better all round to look to other areas of the economy to find money? Furthermore, increasing the retirement age buys you time to reform the economy by temporarily slowing the number of new retirees. Pension reform is almost inevitable, but let's not punish those who are already struggling on their current pension, let's reform it for later generations, making it clear that private savings will be an essential component of future pensions, giving those affected time to save (once the economy returns to growth).
  - sampo 11y ago
    > the answer is not more cuts to their payouts Either Greece would start living within their means, or -- as the case is now -- other countries are giving money to Greece so Greece can e.g. pay pensions to their citizens. But in the long run, they may run out of other countries willing to give them money, and then they must start living within their means.
    - ZenoArrow 11y ago
      Dropping the debt burden in the short term strikes me as the most effective way to give Greece the time to make those adjustments. If the interest generated on the debt was frozen and payments deferred for a few years, and no extra loans given, Greece could readjust, but with debt of approximately 150% of GDP and restrictive austerity demands made by those who hold the debt, Greece has limited opportunities to find the growth it needs to 'balance the books'. You could look at the pensions issue as an example of living beyond their means, or you could look at it as a high portion of GDP only because the growth wasn't strong enough. Focus on growth and the pension issue becomes far less significant.

tptacek 11y ago

You can't quote the retirement age in isolation. You also have to capture the replacement rate, the percentage of the pensioners salary paid out by the plan. That rate usually changes as employers age, so that early retirees replace significantly less of their salary through pensions. The UK, not surprisingly has apparently one of the lowest replacement rates in the world, even for people with full pensions. Greece has one of the highest, and was (at least prior to reforms, some of which may have grandfather clauses) notorious for generous replacement plans for early retirees. Again: these aren't value judgements about Greek citizens. They're assessments of the sustainability of Greece's pension obligations. Greece spends an anomalously high percentage of its GDP on its pensions.

ZenoArrow 11y ago
So what do you propose? How would you fix it? As far as I can see, if you've already got nearly half of your pensioners living below the poverty line, the answer is not more cuts to their payouts. With unemployment at approximately 25% there are many people who can't save money to supplement their pension, plus right now we need Greeks to invest in their own future rather than save. The only solutions I see for the Greeks (if they stay in the Euro) are to stimulate growth and raise the retirement age. Do you agree, or do you see it differently?
- tptacek 11y ago
  Ultimately, you can only make the pension payments you can actually afford. Regardless of the standard of living of Greek pensioners, they can't make up money out of thin air to pay them. Something has to give. Usually, that means raising taxes on young workers. But in Greece's case, that's problematic for other reasons.
  - ZenoArrow 11y ago
    Sure, you can only make the pension payments you can afford, but if a high proportion of Greek pensioners are already struggling (nearly half), wouldn't it be better all round to look to other areas of the economy to find money? Furthermore, increasing the retirement age buys you time to reform the economy by temporarily slowing the number of new retirees. Pension reform is almost inevitable, but let's not punish those who are already struggling on their current pension, let's reform it for later generations, making it clear that private savings will be an essential component of future pensions, giving those affected time to save (once the economy returns to growth).
- sampo 11y ago
  > the answer is not more cuts to their payouts Either Greece would start living within their means, or -- as the case is now -- other countries are giving money to Greece so Greece can e.g. pay pensions to their citizens. But in the long run, they may run out of other countries willing to give them money, and then they must start living within their means.
  - ZenoArrow 11y ago
    Dropping the debt burden in the short term strikes me as the most effective way to give Greece the time to make those adjustments. If the interest generated on the debt was frozen and payments deferred for a few years, and no extra loans given, Greece could readjust, but with debt of approximately 150% of GDP and restrictive austerity demands made by those who hold the debt, Greece has limited opportunities to find the growth it needs to 'balance the books'. You could look at the pensions issue as an example of living beyond their means, or you could look at it as a high portion of GDP only because the growth wasn't strong enough. Focus on growth and the pension issue becomes far less significant.