Greek court challenges pension reform plan

ATHENS Thu Nov 1, 2012 4:37pm GMT

A coast guard officer waves a red flare outside the parliament as he takes part in an anti-austerity protest, with other officers and members of police, coast guard and fire brigade unions, in Athens November 1, 2012. REUTERS/John Kolesidis

A coast guard officer waves a red flare outside the parliament as he takes part in an anti-austerity protest, with other officers and members of police, coast guard and fire brigade unions, in Athens November 1, 2012.

Credit: Reuters/John Kolesidis

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ATHENS (Reuters) - Greek pension reform demanded by foreign lenders may be unconstitutional, a Greek court ruled on Thursday, in a setback to the government's efforts to push through an austerity package needed to secure aid.

The Court of Auditors, which vets Greek laws before they are submitted to parliament, said planned measures such as increasing the retirement age by two years to 67 and cutting pensions by 5 to 10 percent could be against the constitution.

The court said cutting pensions for a fifth consecutive time since the country's first bailout in May 2010 violated a string of constitutional provisions including the principles of individual dignity and equality before the law.

Greek lawmakers, who are expected to vote on the cuts next week, could choose to disregard the court's opinion. But ordinary Greeks could still cite the ruling to fight pension reform in court, making it difficult to implement even if legislated.

Concerns about the measures' constitutionality could also further weaken the fragile ruling coalition's resolve, which passed a key privatisation bill by a razor-thin margin of two votes on Wednesday.

Government officials were not immediately available for comment on the ruling.

Greek pensions have already been cut by more than a quarter since the country was first rescued by the EU and the IMF.

But as the country's finances deteriorate further and privatisation revenues miss targets, Athens has sought even deeper pension cuts to reduce its deficit.

The government expects pension cuts to deliver about half of the 9.37 billion euro savings it is targeting for 2013, according to the country's 2013 budget plan that will be voted next week.

Those savings are part of a 13.5 billion euro austerity package Athens is close to agreeing a final deal on with its lenders, the first step to unlocking a new tranche of aid to avoid bankruptcy this month.

(Reporting by Harry Papachristou; editing by Ron Askew)

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