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  • Social security reform bill includes 30% cuts for future pensions

    The coalition government tabled its long-awaited, critical pension system reform bill on Tuesday, which includes significant…

    The coalition government tabled its long-awaited, critical pension system reform bill on Tuesday, which includes significant changes.

    One of the greatest changes included in the bill is that all employees – including civil servants and military officers – will be inducted in the unified pension fund (EFKA). The bill also introduces uniform rules for 20% income contributions.

    Additionally the bill outlines the details of the national pension, which is set at 384 euros, after at least 20 years of insurance. The sum drops by 2% for every year under his 20 year limit. A minimum of 15 years of insurance is needed to receive a pension.

    The contributory pension in turn is determined by the replacement rates for each period of insurance.

    Years of insurance

    Replacement rate

    0 – 15

    0.77%

    15 – 18

    0.84%

    18 – 21

    0.90%

    21 – 24

    0.96%

    24 – 27

    1.03%

    27 – 30

    1.21%

    30 – 33

    1.42%

    33 – 36

    1.59%

    36 – 39

    1.80%

    39+

    2%

    Meanwhile, the new bill raises employer contribution by 1% and employee contributions for 0.5% for a period of three years. This hike may be further extended in order to ensure the sustainability of the unified pension fund.

    According to the new social security system, new pensioners with up to 25 years of insurance and an income of up to 1,000 euros will receive a higher pension. On the contrary, those with over 30 years of insurance and an average pensionable salary in excess of 1,500 euros may see a pension by up to 30% lower.

    The full bill [in Greek] is available online.

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