The Greek Pension Reforms: Crises and NDC Attempts Awaiting Completion

Greece’s current pension system relies almost exclusively on the state and remains staunchly pay-as-you-go (PAYG) and defined benefit (DB). This paper offers a radical proposal for change: (i) a new multipillar notional and financial defined contribution (NDC and FDC) pension system for all generations first insured after 1993, with contribution rates for primary pensions reduced by 50 percent; and (ii) a transitional system for those first insured before 1993. The proposal’s robustness is tested actuarially for the period up to 2060.  Though financing the legacy cost would be challenging, the quantitative exercise indicates that a radical pension reform, especially if implemented as a part of an overall recovery package, could set the country on a more favorable growth trajectory.