The government last week unveiled a package of changes to the country’s pension system aimed at ensuring the system’s viability in the coming decades.

In presenting the measures, Labour & Social Insurances Minister Andreas Loverdos said the plan focuses on four major changes: ending voluntary and early retirement schemes with an aim to raise the average retirement age by two years, i.e. to 63 by 2015; permanently separating pension and healthcare systems; establishing an agency to manage pension funds’ reserves and assets, as well as changing the method of calculating monthly pension payments.

Labour Minister Andreas Loverdos said the pension system would be broke in five years unless changes were made.

“These reforms are not just tinkering, they constitute a major overhaul to make the system viable in the coming decades,” he said. “We are changing the pensions system in order to keep it alive.”

Loverdos also said the government aims to further integrate social insurance agencies into three groups, while healthcare services will be gradually included in the country’s National Health System.

The pension reform is part of a cost-cutting plan by the Papandreou government which is struggling to slash Greece’s budget deficit.

Loverdos is trying to save 4.5 billion euros this year from a social welfare budget burdened by years of mismanaged spending by social funds on medicine and hospital bills.

Reforming its pension system has been outlined by the European Commission as a priority area for Greece as it struggles to save its dying economy.