Greek court reverses 'unconstitutional' 2012 pensions cuts

A man holds up a cane as pensioners demonstrate outside the Labour Ministry in Athens on April 1, 2015 (AFP Photo/Aris Messinis)

Athens (AFP) - Greece's top administrative court on Wednesday ruled that pension cuts adopted in 2012 as part of the country's tough bailout conditions were unconstitutional, and ordered the cash-strapped government to restore the payments to their previous levels.

The Council of State's long-awaited ruling on private sector pensions comes as Greece's anti-austerity government is locked in tense talks with international creditors over reforms in return for urgently-needed rescue funds, with pensions seen as one of the key sticking points.

The court's decision, which is not retroactive, calls for the government to restore the pensions to the level they were at before a November 2012 law came into effect lowering main and supplementary pensions by five to 10 percent.

The Council of State has in recent years been asked to consider many of the painful austerity measures that caused widespread anger in Greece and helped bring the hard-left anti-austerity Syriza power to party in January.

The court last year found that wage cuts for police, the military and firefighters were also unconstitutional.

But the previous government took several months to comply with the ruling and only partially restored the salary levels, citing budgetary constraints.

Wednesday's pension ruling is expected to cost the state 1.2-1.5 billion euros ($1.3 billion to $1.7 billion) a year, according to Greek economic analysis site Macropolis.

Greece's five-year debt crisis surged back as an international concern after Prime Minister Alexis Tsipras's Syriza won elections on a vow to end the austerity measures imposed since 2010 as part of the country's 240-billion-euro bailout.

The government has since been locked in a four-month standoff with its dissatisfied EU-IMF creditors. Greece has offered reforms on pensions, VAT and the country's primary surplus, but has also demanded debt relief and insisted on its own social programmes.