ECONOMY

Pension law comes into force, with variety of benefits, burdens

Law 3029 reforming Greece’s social security system and passed by Parliament last year came into force on January 1; it provides for gradual changes, on an annual basis, in retirement ages and size of contributions until 2016. The main changes are 10 in number, seven of which may be described as favorable to working people: 1) Retiring public servants will receive pensions that are higher in proportion to their pay in active service; the result of a 176-euro monthly benefit being included in the basis for calculations. To date, many such pensions have amounted to no more than 50 percent of pay. 2) The above measure will also gradually affect the pensions of civil servants who have already retired; the monthly raise will be 28.17 euros this year and reach 140.87 euros in 2007. 3) The minimum pension requirement of 4,500 working days for those insured with the Social Security Foundation (IKA) that work until 65 is lowered to 3,500. Pension payouts will range between 195 and 260 euros per month, on a sliding scale. 4) The auxiliary pensions of civil servants amounting to less than 20 percent of total pension income after 35 years of work will go up by 1/20. 5) Seamen’s pensions go up by 2.5 percent as of this month and are planned to rise from 60 percent of active service pay today to 70 percent in 2007. 6) The time period required for those in hazardous occupations to complete the last 1,000 working days before they retire is raised from 10 to 13 years. Retirement ages for such occupations remain 60 for men and 55 for women. 7) Pensions of private sector employees will be reduced by less than previously in cases of early retirement (before completing 35 years at work). The reduction will now amount to 1/267 of monthly pay for each month remaining until the completion of 35 years, against 1/200 previously. This means that someone retiring five years early will receive 22.47 percent less than the full pension against 30 percent previously. A similar provision for workers in the public sector, banks and cooperatives reinstates the basis for calculation of early retirement pensions applied until 1993. Such workers will now receive pensions 14.28 percent lower, against 30 percent previously. The following three changes are considered unfavorable for those retiring: 1) Retirement ages are raised by six months, except for those insured with the three biggest funds, IKA, TEBE and OGA (farmers), implementing a provision in Law 2084 of 1992, which envisaged a gradual rise in the retirement age by six months every calendar year to 65 years by 2007. This measure has been in force since 1997. For instance, a public servant wishing to retire this year after 25 years in service will have to have completed 63 years at work, against 62.5 last year. 2) Civil servants’ pensions will rise but so will their contributions. The 176-euro increase in the amount used as basis for calculating the pension is accompanied by a 6.67 percent, or 11.74-euro rise, in the contributions of those still in service. 3) The contributions of the 150,000 insured with TEBE, the artisans and small businesses’ fund, go up by 32 percent, or 46 euros, monthly to 189 euros.