Proposed Greek pension system reforms to be presented to institutions




The government intends to present its pension reform proposals to the institutions representing Greece’s creditors on Monday, immediately after the meeting between Labour Minister George Katrougalos and President of the Hellenic Republic Prokopis Pavlopoulos.

The plan moves along three main lines: an overall restructuring of the pension system, action to tackle the deficits and the presentation of a general alternative equivalent to individual memorandum commitments. It is expected to be voted on in Parliament at the end of January, after the negotiations with the institutions and a process of consultation is complete.

The plan calls for a recalculation of pensions using new pension replacement rates and the unification of all pension funds into one. Specifically, the replacement rates based on time insured are as follows:

– from 0 to 15 years, the replacement rate is 0.80 pct per year

– from 15 to 18 years, the replacement rate is 0.92 pct per year

– from 18 to 21 years, the replacement rate is 1.04 pct per year

– from 21 to 24 years, the replacement rate is 1.16 pct per year

– from 24 to 27 years, the replacement rate is 1.29 pct per year

– from 27 to 30 years, the replacement rate is 1.42 pct per year

– from 30 to 33 years, the replacement rate is 1.55 pct per year

– from 33 to 36 years, the replacement rate is 1.69 pct per year

– from 36 to 39 years, the replacement rate is 1.84 pct per year

– from 39 to 42 years, the replacement rate is 2.00 pct per year

Under the new system, IKA-ETAM will be renamed the National Organisation for Social Insurance (EFKA) and made the sole provider of main pensions to which all existing pension funds will belong, with the exception of the seamen’s fund NAT and the farmers’ fund OGA, which will retain their non-pension and social insurance-related roles.

A National Pension will be paid to all individual legally resident in Greece for at least 15 years between the ages of 15 and 67 years old, or on the year when they qualify for a full pension. The amount will start at 384 euros a month and is reduced by 1/40th for each missing year from a maximum of 40 between the 15th and 67th year of age.

The EKAS supplement for low pensions will be paid from January 1, 2016 until December 31, 2019 to pensioners and those eligible for old age, disability and other pensions of all pension funds except OGA. The amount of the EKAS benefit will be adjusted according to total income, starting at just 57,50 euros for those earning between 7,720.01 and 7,972 euros per year, doubling to 115 euros for annual incomes of 7,518.01-7,720 euros, 172.50 euros for incomes of 7,216.01 – 7,518 and 230 euros for incomes up to 7,216.

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