Chaotic scenes across Greece as banks open for pensioners

The chaotic scenes outside a thousand or so Greek banks yesterday, which were allowed reopen for the rest of the week so pensioners with deposit books would be able to withdraw up to €120, underline how sensitive an issue pensions are for Alexis Tsipras’s government.

At many branches, pensioners, some of whom had been waiting for hours on the street, clamoured for access as doors opened. Two of the country’s four banks sought to control the crowds by issuing queue numbers, while the other two said they would serve customers alphabetically over the three days, starting with surnames beginning with A to I.

Pensions have been one of the biggest bones of contention between Athens and its lenders in the negotiations on the country’s financial path.

According to the government’s pension database, set up two years ago, the average monthly pension payout is now €713 before tax. On top of that, some pensioners receive a supplementary pension, based on contributions made solely by them as employees, which averages at €169 a month.

Below poverty line

The government also says that, of the country’s 2.6 million pensioners, almost 45 per cent receive pensions that fall below the poverty line of €665, as defined by Eurostat in 2013.

Starting in 2010, pensions were cut by up to 44 per cent for those in the private sector and by a maximum of 48 per cent in the public sector over three years.

But despite these cuts, the severe, austerity-fuelled contraction of the economy by a quarter has meant state spending on pensions as a share of gross domestic product has actually risen from 11.7 per cent before the financial crisis to 16.2 per cent, pushing it above the EU average of about 12 per cent.

Retirement age

In the recent negotiations, Greece’s creditors wanted to slash state funding to the pensions system by at least €1.8 billion in exchange for more bailout loans. Among their demands was the immediate setting of the retirement age at 67, which the previous government had already agreed to introduce gradually.

They also proposed measures that would see pensioners pay more in health contributions (increasing from the current 1 per cent for primary and zero for supplementary pensions to a standard rate of 6 per cent). More controversially, the lenders demanded the phasing-out of a supplementary benefit for low-income pensioners.

But given Greece’s pension dependence due to the lack of a proper social welfare system and record unemployment levels, any further cuts would be felt across swathes of society, as suggested by a recent survey that found some 52 per cent of households say pensions are their most important source of income.