ATHENS, Greece — Looking tired and leaning on his cane, Fotis Theodorakopoulos watched quietly as other demonstrators gathered to discuss Greece's financial drama and chant defiant slogans outside the parliament.

Although he stayed on the sidelines, the 69-year-old said he was fully aware that Europe was about to decide on his future.

The region's leaders this week are examining new Greek economic reforms demanded in exchange for loans that could determine the country's survival in the euro bloc — and its financial prospects for years.

After six years of recession, Greece is offering nearly 8 billion euros ($9 billion) worth of new savings. But they will come mainly from raising taxes on businesses, households and the purchase of goods in an effort to spare pensions, which creditors had wanted trimmed.

The pensions are based on a state-funded system and have become a flashpoint in the talks on how to heal Greece's public finances. They are hugely expensive for the government, but have already endured big cuts and a large and growing number of Greek families depend upon them as an informal safety net against poverty.

By one government estimate, pensioners' income has been cut by an average of 40 percent since the financial crisis began in 2009.

"We don't want to them to sign another bailout agreement. If they cut pensions any further it will finish us," said Theodorakopoulos, a retired security guard.

He receives a 1,000 euro ($1,135) monthly pension which he uses to look after his disabled daughter.

"It's just me and my daughter. She gets a small state allowance, so we have to help each other," he said.

Greece's creditors — which comprise fellow eurozone states and the International Monetary Fund — had wanted the government to slash funding to the pensions system by at least 1.8 billion euros ($2 billion) in exchange for more bailout loans. The country needs the loans urgently as it faces a debt repayment on June 30 that it cannot otherwise afford.

Lenders are currently reviewing its latest offer of reforms and some officials say a deal is possible this week.

The Greek government offered some measures to make the pension system more financially stable, but spared any cuts to pensioners' income. Instead, it suggests increasing the contributions that employers pay for pensions and phasing out early retirement rights.

Reform of the system has been complicated by a Greek high court decision this month declaring many earlier cuts to pensions illegal.

Alexis Tsipras, Greece's left-wing prime minister, wrote in a newspaper article in Germany, the country's biggest European creditor and among the region's wealthiest economies, to explain why further cuts would have "dramatic social consequences."

"The pensions of the elderly are often the last refuge for entire families that have only one or no member working in a country with 25 percent unemployment in the general population, and 50 percent among young people," Tsipras wrote in the daily Tagesspiegel.

Greece has already made a major pension reform in 2010, when the official retirement age was raised to 67, from 65 for men and 60 for women, and pension funds were merged.

Some 52 percent of households say pensions are their most important source of income, according to a study published in January and commissioned by the country's main small business association, GSEVEE.

Unlike most eurozone members, Greece's welfare system is relatively weak, with effectively no social housing or rent assistance programs, while the jobless only receive benefits and state health coverage for up to one year.

Families are left to provide the safety net.

Pensioner Assimina Griva, who helps run a community center for the retired in a hillside suburb of Athens, illustrates what many Greeks live.

With her monthly pension of 600 euros ($680) she gives financial assistance to her son, who was laid off from the steel industry and otherwise depends on his wife's salary of 400 euros.

"I help my child, and I keep 100 euros for the whole month," says Griva.

The problem, experts agree, is that the system is speeding toward insolvency.

State spending on pensions has risen from 11.7 percent of GDP before the financial crisis to 16.2 percent as the economy shrank. The average in the European Union is about 12 percent.

The burden on the state is set to grow dramatically as the number of pensioners — currently 2.6 million out of a total population of 11 million — is set to keep rising.

Greece has the sixth oldest population in the world, according to United Nations data. Over 20 percent of Greeks are aged 65 and over, a share the EU statistics agency expects to jump to 33 percent in 2060.

Added to that is the impact of the financial crisis.

High unemployment, undeclared labor, and arrears from struggling businesses have hammered state revenues. A 2012 write-down of Greece's privately-held national debt saw pension funds' reserves lose more than half their value, as they were required by law to buy government bonds.

"The pension system in Greece is not sustainable. But how could it be?" Finance Minister Yanis Varoufakis said at a business conference in Berlin this month.

"We want to reform it ... (But) pensions have already been cut by 40 percent. Forty percent! Is cutting further a reform? I don't think it is a reform. Any butcher can take a clever and start chopping things down. We need surgery."

Savvas Robolis, a respected labor expert, argued that short-sighted government policies, the financial crisis, and rapid population aging have created a perfect storm for the pension system.

He says the governments should have gathered resources during years of high growth.

View Comments

"You can't handle this problem with austerity or by borrowing money — only with growth," Robolis, who is head researcher at Greece's largest labor union, told a parliament hearing on national debt.

Rapid aging of the population, he said, leaves one certainty: "Pensioners are coming."

Gatopoulos reported from Brussels.

Follow Gatopoulos at and Kominis at

Join the Conversation
Looking for comments?
Find comments in their new home! Click the buttons at the top or within the article to view them — or use the button below for quick access.