By Chrysostomos Tsoufis

About €770 per year – that is, as much as an average main pension since according to the ILIOS system the average main pension is calculated at €792 – from the fact that in Greece our insurance system is NOT capitalized but redistributive. That is, the current benefits and pensions are financed by the contributions of the employees and any difference – which in Greece is large – is covered by the state, and not by the capitalization of the insurance contributions.

This is the main conclusion of the study on the pension prepared by the Center for Liberal Studies with the European Epicenter network.

Just from the 2022 Greece acquired a capitalization system, which, however, only concerns supplementary insurance and participation is mandatory for workers who entered the workforce from the New Year of the same year, while all other workers under the age of 35 at that time could join voluntarily. An intervention that the study characterizes as rash and a missed opportunity.

Under the current system and given the demographic problem at the same time as the labor shortage, the state budget needs to contribute about half of the money needed each year to pay benefits and pensions. And although with the efforts in the era of the 3 memoranda, the state contribution declined as a percentage GDPhowever, it is still considerably higher than the Community average.

According to the study, the average amount of funds channeled into capitalized pension funds (private, obviously) in Greece in the decade 2012-2021 did not even exceed 1% of GDP when the average of European states is 29%. Of course, Greece is at the bottom of a list dominated by Scandinavian countries, with the corresponding percentage in Denmark reaching 210% of GDP. The Netherlands, Sweden, Finland and Ireland follow. It is no coincidence that the pension systems of these countries, in the majority of analyses, are considered the best and most sustainable on the planet.

If the capitalization pillar were as developed in Greece as in the rest of the OECD countries, it could yield every year approximately 3% of GDP or approximately €6.5 billion, which translates into a loss of €770 per year.

The same problem is faced by other countries with a pension system similar to ours:

Germany: -1600€/year

France: -1300€/year

Italy: €1,100/year

On the contrary in Denmark the profit per capita is €3,500 per year

In this context, KEFIM proposes the mandatory transfer of all supplementary pension contributions to individual investment accounts with the simultaneous liberation of supplementary insurance from the state monopoly so that competition can function. In addition, he is in favor of relaxing restrictions on legal immigration.