Working pensioners to get fairer deal

Government plan seeks to scrap 30% levy to provide incentives for retirees to declare employment

Working pensioners to get fairer deal

A fairer system envisaging a more proportionate burden on working pensioners, so that the declaration of employment is not a disincentive, is expected to be announced in Parliament on Thursday by Prime Minister Kyriakos Mitsotakis, in the context of the presentation of his government’s program.

The final plan drafted by the Labor Ministry foresees the scrapping of the 30% horizontal levy currently imposed on the pension of someone who is still employed, even for a short period of time, within the month, or paid with a “service invoice.” Instead, the new plan stipulates the introduction of a special contribution to the Single Social Security Entity (EFKA) levied on income derived from work.

In practice this means that the vast majority of working pensioners who earn a low or even medium wage will benefit greatly. EFKA is expected to benefit as well, because retirees who take up employment will have an incentive to register their mostly temporary work while keeping 100% of their pension.

Both the prime minister and the new labor minister, Adonis Georgiadis, have publicly said that implementing a fairer system will not only fulfill the goal of “legalizing” pensioner work, but also that of staffing businesses which are unable to fill shortages with personnel.

Specifically, the basic scenario that is already being considered by the General Secretariat of Social Insurance is that the pension amount remains unchanged, at 100%. However, in addition to the deductions already allowed for, a “special contribution” will be withheld from the income that retirees submit each month that is generated only from their job. The amount of this contribution, which according to initial estimates will be between 15% and 30%, has not yet been decided.

Since the income is small, the pensioner’s gain compared to the current system will be significant. If the income is higher, because the employment relationship is full-time, then it is likely that the deduction will be equivalent to a 30% reduction in the pension.

Meanwhile, the Labor Ministry is also looking at ways to increase the participation of debtors in debt settlement schemes, as it is finding that participation is very low. 

Georgiadis is under constant pressure for a new, more favorable regulation that will cover not only old but also newer debts created due to the energy crisis.

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