kathimerini.gr
Greek Economists Back Pension Reform, Conditional on EU Rule Change
A majority of the Hellenic Panel of Economists conditionally supports revising EU's Stability and Growth Pact rules to ease the shift from pay-as-you-go to funded pension systems, as the current system, ignoring implicit liabilities, hinders the necessary reform and places a significant strain on the Greek budget, with pension spending projected at 43% of the regular budget in 2025.
- How will revising the EU's Stability and Growth Pact rules to include implicit pension liabilities impact the funding of Greece's transition to a funded pension system?
- The Hellenic Panel of Economists largely supports revising the EU's Stability and Growth Pact rules to facilitate a shift from pay-as-you-go to funded pension systems. This follows a study by the Center for Liberal Studies (Kefim) highlighting that the Maastricht debt criterion hinders necessary pension reforms, as it doesn't account for implicit pension liabilities. The revision would allow for the funding of this transition, which is particularly acute in Greece.
- What are the main arguments for and against revising the EU's Stability and Growth Pact to accommodate the transition to funded pension systems in countries like Greece?
- Greece's current pay-as-you-go pension system is unsustainable, with pension expenditures only 43% covered by the regular budget in 2025. This is the third highest pension spending as a percentage of GDP in the EU, despite previous reforms. A transition to a funded system, as supported by 48% of the panel, requires accounting for implicit liabilities in the public debt calculation to ensure financial viability.
- What are the potential long-term economic and political risks associated with revising the EU's Stability and Growth Pact to facilitate pension system reforms, and how can these risks be mitigated?
- A successful transition to funded pensions in Greece and other EU nations requires addressing the significant funding gap during the transition phase. This would require transparent accounting of existing implicit pension obligations. A robust funded system would, however, unlock capital for investments, bolstering competitiveness—currently, EU pension funds manage just €3.7 trillion, compared to $28.1 trillion in the US.
Cognitive Concepts
Framing Bias
The article frames the KEFIM's proposal positively, highlighting its potential benefits and the support it receives from a significant portion of the Greek Panel of Economists. The headline and introduction emphasize the potential for facilitating the transition to a capitalization system, without fully exploring the associated challenges or potential drawbacks. The use of phrases such as "facilitate the transition" presents this transition in a positive light.
Language Bias
The language used is generally neutral, but the repeated emphasis on the positive aspects of the KEFIM's proposal and the potential benefits of capitalization could be seen as subtly loaded. For instance, describing the transition as "facilitated" carries a positive connotation. More balanced language could include a more neutral description of the transition process and a more even-handed presentation of the arguments for and against the proposal.
Bias by Omission
The article focuses heavily on the opinions of the Greek Panel of Economists and the KEFIM, potentially omitting other relevant perspectives on pension system reform and the impact of revising EU fiscal rules. There is no mention of counterarguments or dissenting opinions from other economic bodies or experts. The potential negative consequences of shifting to a capitalization system are not deeply explored.
False Dichotomy
The article presents a somewhat false dichotomy by framing the debate as a simple choice between maintaining the current system and transitioning to a fully capitalized system. It does not explore the possibility of hybrid models or incremental reforms that might mitigate the risks associated with a complete shift.
Gender Bias
The article mentions 21 economists responding to the panel's questions, specifying that they are "Ελληνίδες και Ελληνες" (Greek women and men). While it does not exhibit overt gender bias, a more in-depth analysis of the responses from each gender would provide a fuller picture. The lack of further details about gender representation in the economists' views prevents a proper assessment.
Sustainable Development Goals
The article discusses the need to revise EU fiscal rules to facilitate a shift from pay-as-you-go to funded pension systems. This transition could potentially reduce inequality by ensuring a more sustainable and equitable distribution of retirement resources across generations. The current system disproportionately burdens younger generations, while a funded system could provide better retirement security for all.