Rapid deterioration of the demographic problem – A time-bomb ticking on the foundations of pensions

The reduction in births and the doubling of the elderly is a -potentially- demographic time-bomb that puts the future of the insurance system and the possibility of providing guaranteed -in terms of amount and continuity- pensions in doubt .

This ominous forecast is made by the government itself through the Ministry of Labor, which predicts that in 2060 42% of the country's population will be over 62 years old. This means that it will dramatically worsen the "health relationship" of the insurance company, ie the employee-retiree ratio that a retiree will have for an employee.

The Deputy Minister of Labor and Social Affairs, Mr. Panagiotis Tsakloglou, does not stop mentioning in each of his speeches that "the demographic risk in terms of pensions is too great to whistle indifferently".

In fact, he emphasizes that in 2030 Greece will be the oldest country in Europe and with the current system of generational compensation - today's workers paying the pensions of today's retirees - the future will not be long in coming.

He believes that in order to mitigate the effects of the demographic problem on the insurance system, solutions are provided through the conversion into a capitalization of the existing distributive character of the second insurance pillar - that is, the auxiliary insurance.

The new supplementary system has the "great advantage of minimizing the demographic risk to pensions", he notes.

One retiree for each employee

Indicative of the demographic risk are the data submitted by the Ministry of Labor to the Parliament according to which in the last 40 years (1980-2020) the number of young people under 25 decreased by 35%, births decreased by 44% and the elderly (over 65) almost doubled (+ 93%).

Births in...