The government will table pension reform legislation before July 15 without waiting for unanimous social partner agreement, Labour Minister Marinos Moushouttas signalled at Thursday’s session of the Labour Advisory Body, setting up a confrontation with trade unions over the pace and scope of the reform.
Moushouttas made clear the government intends to submit the bill covering the first pillar of the pension system in time for parliamentary consultations and a vote, with the aim of having the reform in effect from January 1, 2027.
Trade unions disagreed, arguing it would be preferable to delay by several months and table legislation covering all three pillars together, since each complements the others. Their central argument is that the current proposals do not achieve adequate pension levels, as some pensions will remain below the poverty line even after the reform is implemented, making it necessary to advance the second pillar — covering provident funds — at the same time.
According to Phileleftheros sources, four key points emerged from Thursday’s session. First, all social partners understood that the government will proceed with tabling the bill even without a unanimous or majority positive opinion. Second, the Finance Ministry has established the assumptions on which Social Insurance Fund (SSF) investments will be based.
Third, even with pension increases, some pensions will still fall below the poverty line. Fourth, the employers’ side insisted on three non-negotiable conditions for the reform: no increase in contributions, the SSF must remain sustainable, and public finances must not be put at risk.
A central issue in the discussions concerns minimum pensions. The government has stated its intention to abolish the supplementary “small cheque” payment and fold it into the basic pension, so that recipients receive a single transfer.
However, calculations presented at the session show that even after these changes, the basic pension for a single low-income pensioner will be capped at €794 following the increase and the incorporation of the small cheque. With 2025 data, the poverty line stands at €110. This means that after the reform, some individuals will still be receiving pensions below the poverty line.
The counterargument put forward in the session is that the SSF is not the only social policy instrument available. Unemployment benefit, widow’s and disability benefits, the Guaranteed Minimum Income (EEE) and other tools exist for groups requiring financial support. On this basis, the SSF should not be viewed as an exclusive social policy mechanism, the argument goes.
Finance Ministry representative Dionysis Dionisiou presented an analysis of the investment policy and the plan for repaying the state’s debt to the SSF, according to Phileleftheros sources. The assumptions shared at the session included GDP growth of between two and three per cent, inflation not exceeding two per cent, investment returns of between 3.5 and five per cent, and a lending rate not exceeding a specific percentage yet to be determined.
Final decisions will also take into account the tax reform, SAFE, and the fact that three further contribution increases to the SSF are scheduled before 2039. The sustainability scenarios for the fund run to a horizon of 2060. The ministry said not all assumptions would be made public at this stage, as the preparation of all scenarios and data has not yet been completed.
Speaking after the session, Moushouttas said pension increases combined with a reduction in the 12% actuarial penalty are expected to gradually reduce state supplementary payments to low-income pensioners. On the 12% reduction specifically, he said “there is a government position to reduce this specific percentage.” He added that the new investment authority is expected to begin operations on January 1, 2028.
On investment policy, Moushouttas outlined five points. The government intends to end the longstanding practice of the state borrowing from the SSF. Going forward, “all future surpluses will go into the fund’s account for investment purposes.”
A separate independent entity will be created to manage SSF investments, based on international governance standards and modelled on the hydrocarbons fund framework passed by parliament.
The state’s debt to the SSF, which stands at approximately €12 billion, will be repaid gradually, with due regard to public finances. Annual state instalments to the fund will be transferred to the same investment account and invested “within a framework of low and measured risk,” with strict rules governing the new authority’s investment policy.