ECONOMY

Pensioners feel impact of reforms

pensioners-feel-impact-of-reforms

Thousands of pensioners receiving this week’s Social Security Foundation (IKA) and state pensions have suffered deductions of around 4 percent on main pensions and 6 percent on auxiliary pensions. Similar reductions will be seen in pensions from the fund for freelancers and the self-employed (OAEE) and the Farmers’ Pension Fund (OGA) to be paid out on September 1. This is the first installment of the third memorandum’s cuts which cover increased healthcare contributions retrospectively from 1 July.

The cuts to main pensions come to around 2 percent to cover contributions to Greece’s main healthcare provider, EOPYY, increasing from 4 to 6 percent. But as the deduction is made from the initial pension amount, without factoring in deductions made since 2010, the actual reduction is closer to 3 or 4 percent.

For example, an IKA pensioner who in 2010 received a basic pension of 1,000 euros gross before cuts received 912 euros in June 2015. That pension will be reduced by 2 percent of the initial amount of 1,000 euros, which means a further cut of 20 euros that will bring down the monthly payment to 892 euros.

On supplementary pensions, a 6 percent dedication is being made, which has been calculated on the final amount paid. According to the decision of the Single Supplementary Social Security Fund (ETEA), the retention of 6 percent is applied per pension and not per beneficiary. This means that a pensioner receiving two pensions will see cuts to both.

A 200-euro supplementary pension before the 2010 cuts, which currently stands at 157.7 euros today, will be cut to around 148.3 euros (gross).

Between now and Tuesday, when the September pension payment is completed, 2.6 million pensioners will suffer cuts averaging 3.5 percent.

Since the law states that the reductions will apply retroactively from July 1, the cuts for the last quarter of the year will be greater. In October, November and December pensions, along with the current reductions, retroactive deductions for July and August will also be made in three equal installments.

For example, for a basic pension of around 800 euros gross, the monthly deduction would be 15 euros in September and 27 euros each month for October to December.