Sarris plans more reform to pensions, social security–Reuters

Minister of Finance Michael Sarris is planning more reform to the pensions and social security systems in order to preserve the pension system beyond 2025, according to an interview with Reuters’ Michele Kambas.

Sarris told Reuters that the social security system is viable until 2025 if no reforms are implemented but after that “a rapid deterioration of the financial viability of the system” is expected.

Key reforms that will be discussed with social partners in the coming year include increasing the retirement age from 63 to 65, an “incremental” rise in social security contribution rates, altering the link to earnings of current pensions and tightening eligibility criteria.

Sarris said that increasing the size of the workforce, by encouraging greater participation of women and “being a little less hostile” to foreign workers, would help ease the burden on pensions.

All this, plus a 20% increase in tax revenue over the next few years to 2009, is planned without an increase in tax rates.

Nor does the government expect to issue any eurobonds this year.

Sarris noted that the authorities hope for an arrangement to market government bonds on the (currently highly illiquid) secondary market within the next year, although Reuters notes that this has been “embroiled in controversy”.