Pensions are cut for most Greeks

May 10, 2016

As a result of the pension reform law passed by the Greek parliament last Sunday most pensioners will have significant cuts in their pensions.

Estimates also say that some 400,000 pensioners stand to lose between 20 and 200 euros per month due to pension cuts, while only main pensions of up to 1,820 euros net (or 2,000 euros gross) are protected from cuts. Also, the so-called EKAS allowance currently paid to 380,000 retirees on low pensions will gradually be phased out until 2019, which will mean a 35 percent reduction in their incomes.

The new method for the calculation of new pensions for current workers should mean an average reduction of between 10 and 30 percent compared to what they had been expecting to receive upon retirement. Experts further estimate that some 250,000 pensioners, mainly people with disabilities, widows, low-salary workers or long-term unemployed, will see their pensions reduced by up to 40 percent in the next few years compared to what they would have received under the previous system.

Under the new rules all workers will have to pay contributions, amounting to 20 percent of their total income, along with 7 percent going to auxiliary pensions, 6.95 percent for healthcare and another 4 percent if they have money withheld for a retirement lump sum. This adds up to a total deduction of 37.95 percent of their income.

Those who will lose the most will be high income self-employed people, those with two jobs regardless of income level, as well as civil servants – mainly those on special salary regimes, as their contributions to social security funds will rise by up to six times what they have paid to date.

The bill that became law on Sunday night also provides for the merging of all social security funds for main pensions into just one, as well as one for auxiliary pensions and retirement lump sums.

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