The baby boomer retirement wave

A difficult seven years is estimated to pass insurance system of the country, as by 2030 it will rush to retire the generation of baby boomers.

In fact, experts are sounding the alarm by pointing out that although the “great exodus” began in 2022 and will last until 2030, with around 165,000 to 200,000 people retiring annually, the bulk of retirements will occur from 2025 onwards .

Already, both the data of her study European Commission for the insurance in our country, as well as its monthly data Ministry of Labour through the information system “Atlas» show that the runaway wave is not reversible.

It is typical that, in less than 10 years, the employed are expected to decrease to 4.09 million people in 2030 from about 4.196 million in 2023. In the same 7 years, the pensioners are expected to increase by about 130,000 people. In fact, the pension expense will fall below 14% (it was 14.4% in 2023) after 2035 when the entire generation of baby boomers will have retired, so that in 2050 it will gradually be at 13.6%.

As he explains speaking to “K” his dr Pantheon University, actuary Vassilis Betsis, in our country due to the civil war the baby boom was delayed compared to the rest of the countries of Europe which had started since 1946. It started in 1955 and lasted until 1967. In this period, the average number of births per year was 156,000 births. “The retirement of the baby boomer generation has started from 2022 and will last until 2030. However, the largest volume of retirements will take place from 2025 to 2030, because in the period 1960-1965 births were higher than average of 156,000 births”, Mr. Betsis points out.

According to general secretary of Social Security Nikos Milapidis, the majority of those born since 1946 are already in the retirement process and within the next 3-4 years the “exit” will be complete. Of course, if the designation “babyboomer” in Greece also concerns those born between 1960 and 1965, then this is a more numerous category of insured persons and the process may take longer. These are those who, according to Mr. Milapidis, “are on the brink of retirement and on the verge of retirement employment, if they wish to do so.”

In fact, the general secretary of Social Security notes that in the latest actuarial studies the forecasts have been made and despite the increase in pensioners, the amount of pensions is guaranteed. “The pressure is expected and controllable,” he pointed out. To add that since we are talking about a generation of qualified workers, if they choose to work with the new favorable regime of employed pensioners, then they will contribute back into the system, while at the same time increasing their incomes. Of course, for some, this new favorable regime, with the abolition of the -30% penalty in the pension of those who are still working, is an additional factor in increasing retirements during the period under review.

Pension spending will drop below 14% after 2035, when all the baby boomers will have retired.

And indeed, according to screening performed for “K” Mr. Betsis, it seems that in 2024 the pension applications will exceed 200,000 and will approach the 220,000 which was also a record number in 2022.

Specifically, from 103,308 retirements we had in 2019, in 2022 the number of retirement applications jumped to 222,800. In the year 2023, a slight decrease was observed, but from the data of the “Atlas” system for the first two months of 2024, the estimates are not auspicious. Between January and February 2024 there is an increase in retirements by 13%, from 29,806 retirements to 33,459. Based on these figures, the experienced actuary estimates for this year that if this trend continues, the number of new retirements will approach the level of 2022, reaching 218,500 retirements.

But also based on actuarial projections, Dr. Panteion University V. Betsis paints a not so positive picture: the employed are expected to decrease to 4.09 million people in 2030 from approximately 4.196 million in 2023, while retirees they are expected to increase in the next 7 years by approximately 130,000 people. This will of course also affect the pension expenditure, which in nominal terms is estimated to increase from 31.5 billion euros in 2023 to 35.1 billion euros in 2030. It should be noted here that as a percentage of GDP it is estimated that it is about the same level (14.2%) as that of 2023, which was 14.4%.

After 2035, when all the baby boomers will have retired, pension spending as a percentage of GDP will begin to gradually decline below 14% and in 2050 it will be 13.6%, in 2060 at 12% and 2070 to 11.9%.

To the enormous problem of population decline, which is estimated to have decreased to 7.8 million people, of course must be added the maturation of Law of Katrougaloswith significantly limited pension benefits.

Early retirements

The… “remnants” of the transitional provisions of the 2015 memorandum law on retirement age limits are another reason for the increase in pensioners in the coming years. As there is no incentive for those who wish to stay at work despite reaching the prescribed retirement age limits, since replacement rates remain low (despite the interventions of Vrutsis law), the experts see no possibility of limiting the applications for retirement. A bell for the insurance and especially for early retirements was recently rung by Mr Governor of the Bank of Greece Giannis Stournarasin the annual report of the Central Bank of Greece on the Greek economy, calling for a definitive end, along with taking measures for the aging of the population and the further reduction of insurance contributions.

However, in practice, with the memorandum interventions of August 2015, a very small number of insured persons now have the right to retire early before the age of 62, as the period of validity of the transitional limits expires. These are mainly mothers of minors in the private sector, in the public sector and in the former special funds, as well as women with the status of heavy and unhealthy (BAE), who can leave earlier in the coming years if they have already established a pension right in the two years 2010- 2012.