Heard on the Street

Greek Debt Deal Won't Solve Pensions Tragedy

Updated Oct. 28, 2011 4:11 p.m. ET

If the outlook for Greek banks is grim, spare a thought for the fate of Greek pensions. The government is considering a transfer of state-owned assets to pension funds to make up for losses following the proposed 50% Greek sovereign-debt haircut: a potential €4 billion ($5.68 billion) hit. But that won't put Greek pensions on any more of a sustainable footing.

The pension system in Greece is dominated by the state, and mostly made up of defined-benefit plans funded by existing employees. Private and public-sector employees...

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