Time for the ‘pay-as-you-go’ system … to go
Μαρ 27th, 2008 | Μάρκος Δραγούμης| Κατηγορία: English, Ελλάδα, Πολιτική | Email This Post | Print This Post |A new political party argues in favour of a funded pension system whereby’every Greek citizen will be obliged to deposit in a special type of bankaccount or insurance corporation their contributions towards a pension duringtheir working career. The amounts thus deposited belong to the insured person or their heirs in the case of early death’
The Liberal Alliance, a new Greek political party created by articulate, university-educated, young professionals, put forward a proposal on the issue of pensions that no other party has so far dared mention. In a clear, well-written, succinct and yet comprehensive document they handed over on March 13 to the secretary of the Greek parliament requesting that it be distributed to all Greek MPs, they argue in favour of replacing the present ‘pay-as-you-go’ system by a ‘funded pension scheme’.
The difference is crucial. Under the present scheme those in employment today pay for their elders’ pensions. As the numbers of contributors diminish – for demographic reasons – and the numbers of the elderly increase – because of advances in medical science – the amount of cash in the pension funds starts to dry up. The recent government law tries to cut waste by reducing some 150 asset-wasting pension funds run mostly by incompetent and corrupt party-hacks and unionist ignoramuses to 13 such funds, of the same ilk, unfortunately. The law also tries to reduce the outrageously inflated number of jobs in Greece (some 500) classified as heavy and hazardous (including hairdressers) that allow those holding them to retire early. It also attempts to correct some other glaring iniquities and absurdities in the present system which, however, it retains as such.
The worst aspect of the ‘pay-as-you-go’ system is that it encourages those benefiting from it to claim ever increasing pensions at an ever decreasing age. As an anarchist graffito put it: “Pension at 18 – military service at 100”. The slogan is no joke. It expresses the lethal principle underlying all populist (in)security systems: Taxpayers (rich ones) must be compelled to pay through the nose larger and larger sums of money to those “in need” who are justified to demand for ever more. The general secretary of the General Confederation of Greek Workers refused even to discuss the pension bill proposed by the then Pasok government under Simitis. “There is no need for any change,” he said on 16 April 2001, “only for more money”. Simitis abandoned his reform forthwith.
The Liberal Alliance argues in favour of a funded system whereby “every Greek citizen will be obliged to deposit in a special type of bank account or insurance corporation (private or public) of their choice their contributions towards a pension during their working career. Employers will also contribute to this account. The amounts thus deposited belong to the insured person or their heirs in the case of early death.” There follow seven points covering the details of the new system.
The proposals of the Liberal Alliance are far-reaching. In a Greece where working people will be saving money for their own pension, the stability and growth prospects of the free market economy become of paramount importance to every employed person. Disruptive strikes, like the recent ones, will become unthinkable. ‘Contribution evasion’ will also disappear overnight. It is an excellent proposal and the Liberal Alliance ought to be congratulated for bringing it forward.
The problem is, as always, that its introduction will hurt a lot of vested interests. There are literally thousands who benefit from the complicated, tentacular, corrupt system now in force. These should be identified, stigmatised and swept aside. Those in favour of the new ‘funded-pension scheme’ must point out that there is also a moral dimension in the ‘forced savings’ included in the ‘pay-as-you-go’ system which assumes that working people are too irresponsible – imprudent, prodigal, forgetful, lazy, stupid – to plan for their own financial security in their old age.
The question then arises: How is it possible to pass from one system to the other without pain? If all today’s employees started contributing to their own personal pension fund, many amongst them would not have enough time to accumulate sufficient funds for a decent pension. The question also arises: How would today’s pensioners survive?
The answer is simple – if not easy to implement – given the vested interests desperately fighting against any change. The state can set up, possibly with the help of Brussels, a special fund – like the one it set up recently for fighting poverty in Greece – that will cater for today’s pensioners. Except for special budget contributions and perhaps a raise in VAT that will be allocated to this special fund, money will, of course, continue to flow into it from those still employed under the gradually disappearing ‘pay-as-you-go’ system. Their numbers will be dwindling because under the new system all new employees – whether in the state or the private sector – will no longer pay for the pensions of their elders but towards their own. In this way, the ‘pay-as-you-go’ system will gradually be reduced until it expires with the last pensioner still qualified to get his/her pension through it. If there is money left in the special fund set up for this purpose, this can then be used by the state to relieve poverty or for some other worthy cause.
Greeks – this columnist believes – will agree not only to support but even to finance the transition from one system to another, if things are properly explained to them. One hopes that once the present hullabaloo is over, New Democracy – practically governing without an opposition these days – will manage to launch and implement such a reform. Otherwise one would have to wait for the Liberal Alliance to come to power.
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Notes:
1.Mark Dragoumis’ book The Greek Economy 1940-2004 is available at bookstores throughout Greece and directly from this newspaper
2.Mark Dragoumis’ books Greece on the Couch, Session 1 and Greece on the Couch, Session 2, containing select ‘Analyse This’ columns, are available at bookstores throughout Greece and directly from this newspaper
3. Published in ATHENS NEWS, 21/03/2008
Φανταστείτε το εξής
Όταν πεθάνει κάποιος, τα χρήματα τα παίρνει ο κληρονόμος αυτού. Αυτός ο κληρονόμος πλέον δεν χρειάζεται να αποταμιεύει τόσα (η και καθόλου) σε σχέση με αυτά που αποταμίευε αυτός που πέθανε.
Εν ολίγης, όταν θα έρθει η δεύτερη γενιά, λίγο πολύ το σύστημα θα είναι ήδη fully funded και οι ανάγκες για περεταίρω κεφάλαια θα είναι λίγες,
Επιπλέον, φανταστείτε όλα αυτά τα κεφάλαια να ήταν επενδυμένα σε μετοχές για 30-40 χρόνια!!
Σήμερα τα λίγα λεφτά που έχουν τα ταμεία πηγαίνουν στο Ελληνικό δημόσιο και ουσιαστικά παίρνουν από μηδέν έως πολύ λίγη απόδοση
η φιλελευθερη συμμαχια γινεται γνωστη σιγα σιγα…παμε καλα παιδια
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“Μάσσιαλλα σας ρε κοπέλια” που λαλούμεν τζιαι στην Κύπρο.
Γιατί να μην υιοθετήσουμε το Αυστραλέζικο μοντέλο το οποίο δημιουργήθηκε με συστάσεις της Παγκόσμιας Τράπεζας και βασίζεται πάνω σε τρείς πυλώνες.
α) Υποχρεωτική συνεισφορά στον ΙΔΙΩΤΙΚΟ τομέα. Έτσι ενισχύεται η οικονομία της χώρας και ο καθένας τα δικά του.
β) Προαιρετική συνδρομή για όσους θέλουν να φυλάξουν περισσότερα απ όσα τους επιβάλλει ο νόμος
γ) Δίκτυ προστασίας για τους εξαιρετικά φτωχούς και αναξιοπαθούντες (Αβορίγινες κτλ)
Φυσικά για να γίνει όμως επένδυση στον ιδιωτικό τομέα χρειάζεται ΔΙΑΦΑΝΕΙΑ που δυστυχώς στερούμαστε στην Ελλάδα και Κύπρο. Εγώ προσωπικά έχω τις επιφυλάξεις μου μην μας φάνε τα λεφτά οι μεγαλοκαρχαρίες όπως έγινε τον καιρό του χρηματιστηρίου αλλά σαν ιδέα είναι εξαιρετική.
Ξέρετε αν υπάρχουν φιλελεύθερα πολιτικά κινήματα και στην Κύπρο;
Έσιετε ’γειαν κουμπάροι