ECONOMY

Ceiling seen reducing high pensions

ceiling-seen-reducing-high-pensions

The Labor Ministry is about to introduce a ceiling on the monthly amount of pensions, to apply retroactively, in order to plug the loophole in the Katrougalos law that allowed for some very large pensions, which in certain cases exceeded 20,000 euros a month.

Ministry sources say that the retroactive application means that any pensioners who received very high benefits will now have to return the amount over the ceiling to be set. They add that they will not ask this small number of retirees to pay those amounts in a lump sum, but rather that this will happen gradually, offset by their monthly benefits. Minister Yiannis Vroutsis has already authorized an experts committee to determine the precise level of the ceiling and to prepare the wording of the regulation.

At this stage the Single Social Security Entity (EFKA) is seeking to establish precisely who has already received such pensions and how this happened.

The problem, as Vroutsis told Skai TV last Saturday, stemmed from a gap in the law named after former minister Giorgos Katrougalos, which concerned a number of workers insured according to the old system – paying social security contributions without a ceiling – but who submitted a pension application through the new system. Since the Katrougalos law had made no provision for a ceiling on the pensions issued, those who had paid much higher contributions stood to collect much higher pensions.

This situation mainly concerns notaries with many years of social security contributions, senior officials at state corporations with contributions in excess of 20 percent of their monthly salaries, and some other workers.

The fact that those pensioners have paid large contributions, and the shift of the pensions system to a more proportionate setup make the introduction of a ceiling and the forced return of amounts above that figure more difficult in legal terms. It is possible that the imposition of a low ceiling would generate a wave of court cases, with a possible victory for the appealing pensioners. Therefore, social security experts note, it is likely the ceiling will be set relatively high, at around 6,000 euros per month.