The Greek government today agreed a bill to overhaul its pension system, one of the requirements of a bail-out plan agreed with the EU and the IMF.
The reform cuts benefits, curbs widespread early retirement, increases the number of contribution years from 35-37 to 40 and raises women's retirement age from 60 to match men on 65.
'It will be a completely new system,' Labour Minister Andreas Loverdos said after the cabinet meeting. 'It was difficult but now I believe we can change things in Greece,' he added.
Opinion polls show a very large majority of Greeks oppose the reform, and unions will stage a 24-hour strike on June 29 to press lawmakers to vote against the bill, which the government also submitted to parliament today.
Greece must adopt the reform by the end of September under the terms of the EU and IMF's €110 billion emergency loan. Loverdos said passing the law would not be easy but he was certain it would eventually be adopted.
Prime Minister George Papandreou said Greece needed the reform to be able to pay pensions. 'We can't afford not to move forward,' he told lawmakers before the cabinet meeting.
'Fiscal adjustment is the tip of the iceberg, we need deep changes,' he told lawmakers.
The pension reform is a major test of the government's ability to go further than tax hikes and spending cutbacks and embark on structural changes.
The European Commission had forecast that Greece's bureaucratic pension system's costs would explode to 24% in 2050, the highest in the euro zone, if the system were left unchanged.
