Flexible ‘penalty’ for retirees?

Seniors who still work may have a smaller pension cut, based on days worked per month

Flexible ‘penalty’ for retirees?

The New Democracy party, which is poised to win the June 25 election, is planning for a more flexible pension reduction regime for retirees who still want to work, with the aim of legalizing their employment, but also of staffing businesses that are unable to fill job vacancies with experienced employees.

ND officials, as well as their leader Kyriakos Mitsotakis himself, are already leaving such a possibility open, considering that in this way more pensioners will be able to work legally, as a result of which uninsured employment will drop, vacant positions will be filled and the state’s revenues will rise. Corresponding pressures are also being exerted by large companies that want to staff critical departments with highly experienced executives who have now retired, especially after the global health crisis and its consequences.

The main scenario already in the desks of the Labor Ministry from the previous leadership concerns the implementation of a more proportional way of calculating the “penalty” – that is, reducing pensions by 30%, based on days worked per month. This is because it has been established that the majority of employed pensioners do not work 25 days a month, but quite a lot fewer. However, EFKA applies the pension cut whether one works five days a month or the whole month, with a direct consequence of that dramatic reduction seen in the pensioner’s income.

Once a new system with more proportionate penalties is implemented, the pensioner’s income losses will be much smaller.

There is another scenario under consideration, which, however, has a lower probability of implementation and concerns the reduction of the “penalty” from 30% to 20% or even 15% horizontally.

Today, if a pensioner works, he has a 30% reduction in his pension. In other words, he receives 70% of both the main and the secondary pension. The first intervention toward the implementation of a fairer system was made with the Vroutsis law, which reduced the “penalty” from 60% to 30%. But it remained horizontal for everyone, regardless of days worked.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.