UNFOLDING GREEK TRAGEDY

2.65m in Greece face cuts in meagre payments

WHEN PENSION ENDS: For Mr Iakovos, 41, a home-cooked meal was still within reach when his mother was alive and drawing a pension. After she died in 2012, the Athens resident has been collecting aluminium cans but is unable to make a living. (Clockwis
An unemployed Mr Iakovos, 41, collecting food from a neighbourhood soup kitchen. PHOTOS: EPA
WHEN PENSION ENDS: For Mr Iakovos, 41, a home-cooked meal was still within reach when his mother was alive and drawing a pension. After she died in 2012, the Athens resident has been collecting aluminium cans but is unable to make a living. (Clockwis
Mr Iakovos eating onions at home to stave off hunger. PHOTOS: EUROPEAN PRESSPHOTO AGENCY
WHEN PENSION ENDS: For Mr Iakovos, 41, a home-cooked meal was still within reach when his mother was alive and drawing a pension. After she died in 2012, the Athens resident has been collecting aluminium cans but is unable to make a living. (Clockwis
Mr Iakovos holding a picture of his mother when she was young. She died in 2012. PHOTOS: EUROPEAN PRESSPHOTO AGENCY

Greece has become the first developed country to default against the International Monetary Fund. The Greek government failed to transfer €1.55 billion (S$2.33 billion) to the Washington-based fund by close of business on Tuesday - the single largest missed repayment in the IMF's history. Meanwhile, Greece has shut down its financial system, including its banks and stock exchange, and has capped ATM withdrawals at a daily limit of €60. The Straits Times looks at the impact on pensioners, civil servants and businesses.

The tumult has already hurt regular Greek citizens, with some retirees left in the lurch and unable to withdraw their pensions.

Many elderly Greeks do not own bank cards and make withdrawals in person at their bank branches, so they find themselves completely cut off from their money.

Thousands of angry pensioners besieged the country's banks yesterday, after 1,000 branches temporarily reopened to allow those without cards to withdraw money from their state pensions.

Pensioners with surnames starting with the letters A to I could withdraw half their pensions yesterday, said Mr Pericles Boutos, who is Greece's Ambassador to Thailand and is also now accredited to Singapore. He told The Straits Times that the rest will be allowed to withdraw money today and tomorrow.

The decree to impose capital controls and cap withdrawals at €60 (S$90) a day originally exempted pension payments.

This privilege was revoked about 12 hours later.

 

Greece's cash-strapped government has been finding it increasingly difficult to meet monthly pension payments and pay salaries to public servants.

About 57,000 Greek retirees will also not receive their pensions this month.

Pensions are a significant sticking point in the stand-off between Greece and the International Monetary Fund, the European Commission and the European Central Bank.

 

Greece's creditors are insisting that the country impose severe tax hikes and pension cuts to secure much needed loans.

In addition to the call for increased taxes and reduced benefits, there is also a demand to further reduce the meagre pensions most Greeks receive.

Severe funding shortfalls remain. Greece's pension funds have lost at least €25 billion since 2012.

The system remains mired in bureaucracy and the pace of change is extremely slow.

There is also a backlog of pension applications that will add to the country's existing tally of 2.65 million pensioners.

A version of this article appeared in the print edition of The Straits Times on July 02, 2015, with the headline '2.65m face cuts in meagre payments '. Print Edition | Subscribe