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Greek pension reform once again: Explaining its logic and issues

Tinios, Platon, (2016), “Greek pension reform once again: Explaining its logic and issues”, Briefing Note, LSE, 15 January

Pension reform is, once again, the main issue in Greek political discussion. It returns only months after all retirement ages rose to 67 in the summer of 2015. There have been at least three major pension reforms and at least ten pension cuts since 2010. All this frantic activity apparently fails on the most basic test of pension reforms: to prevent the need for another pension reform a few years (or months) down the road. And all this in a country that has been accused of not doing enough on reform. Pre-crisis reform inertia has been replaced by apparently ineffective activism. Discussion without action was replaced by action without discussion. This briefing note tries to cut through the fog. It attempts to promote understanding, to explain the strategic choices and to highlight the major issues of discussion. A brief presentation of the pre-crisis conundrum is followed by an outline of the logic and practice of the repeated pension changes following the bailout. The situation at the end of the second bailout and the period of negotiation is dealt with in greater detail, to provide background for the current proposal and the outstanding issues which will dominate discussion. The note ends with a consideration of a possible alternative. A timeline at the end of this document outlines the main events, focusing on bailout-era changes.

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