RENEE MONTAGNE, HOST:
Private creditors holding Greek bonds have until the end of today to participate in the largest sovereign debt restructuring in history. This means creditors must exchange the Greek government bonds they now hold for new ones that are worth far less. Some creditors are balking, since it means up to a 70 percent loss on their returns.
The debt swap would knock more than $130 billion off that country's national debt and save Greece from a messy default. But it could also hurt pensions in the country, since many retirement funds hold Greek bonds.
Joanna Kakissis reports from Athens.
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JOANNA KAKISSIS, BYLINE: Nikos Zarganis is a civil engineer who runs a small firm in Athens with architects and an interior decorator. They work part-time because the recession has stalled building. Zarganis, who's 66, says he'll keep working as long as he can.
NIKOS ZARGANIS: I'm for 44 years an engineer, so I have lots of years behind me. But I am one of those that I am exactly the opposite to all those people who are running to get their pension. I'm quite happy, and for as long as I have an income that is above my pension, I stay.
KAKISSIS: Zarganis says he'll stay even though he knows he'll lose money by waiting to retire. The bond swap, which is also called PSI, for Private Sector Involvement, could cut pensions by at least 15 percent, by some estimates. So some retirement funds, including ETAA, the one which manages Zarganis's pension, are trying to get out of the swap.
NIKOS TESSAROMATIS: Well, the concern obviously is that they are going to see a reduction in the value of their portfolio.
KAKISSIS: That's finance professor Nikos Tessaromatis.
TESSAROMATIS: This is money that is to be used in the future if there are shortfalls. It makes pension funds less viable.
KAKISSIS: Greece has a pay-as-you-go Social Security system, which is running huge deficits. Pensions are guaranteed by the Greek constitution, so the state would have to raise revenue to pay them. Tessaromatis says that could come from increased taxes or...
TESSAROMATIS: Cuts in benefits, perhaps an increase in the time working - in the working life, you know, getting a pension later rather than earlier.
KAKISSIS: Nikos Zarganis says that's fine with him. He says his pension is a tiny slice of a much bigger issue - rescuing Greece from financial collapse and a possible exit from the eurozone.
ZARGANIS: The way things are today, if this PSI doesn't come through, we are in a terrible mess. There are warnings from all around us that we have to do that regardless if you agree or disagree or if some of the pension funds are losing money and everything.
KAKISSIS: He says his own pension fund, ETAA, will probably be forced to take losses. The Greek parliament recently passed a law invoking something called collective action clauses. This goes into effect once a majority of Greek bond holders have agreed to take losses - forcing reluctant bondholders like ETAA to also join in the debt swap.
But Tessaromatis says fewer returns are better than none at all. He says a failed debt swap would mean a chaotic default.
TESSAROMATIS: And if it defaults, you will lose it all. That is the dilemma, if you like, of the people taking these decisions.
KAKISSIS: Greece must make its economy more competitive to survive in the long run, says financial analyst George Prokopakis.
GEORGE PROKOPAKIS: People may suffer - actually, will suffer for a few years. The real issue is to - how to devise a strategy so that not very many people suffer for many years.
KAKISSIS: That challenge will be left to the next government, which could be elected as early as next month.
For NPR News, I'm Joanna Kakissis in Athens. Transcript provided by NPR, Copyright NPR.