Pension hikes to come in June

Pension hikes to come in June

The new bill by the Labor Ministry that was tabled on Monday in Parliament creates a new landscape for pensions and social security contributions. The interventions promoted have led to a strong reaction by many unions, which have decided to call a 24-hour strike for Tuesday.

Among the many changes it includes, in line with the recent decisions by the Council of State, are increases in the replacement rates for workers with more than 30 years of insured labor, at a cost that will not exceed 80 million euros for the first year of application, rising to 220 million euros in the second.

The bill further incorporates new social security categories for 1.44 million self-employed and freelance professionals who have the right to choose the level of their monthly contributions, which will also determine the level of their pension.

Another provision concerns the reduction of contributions for full-time salaried employment as of June by 0.90 percentage points, leading to an estimated reduction of non-salary costs by 123 million euros for the second half of the year.

The pension hikes, to be granted in June in a lump sum along with the retroactive payments due from October 1, 2019, concern those who have retired since May 13, 2016 after at least 30 years of insured labor. Any pensioners who retired before the activation of the so-called Katrougalos law in May 2016 and have a small or negative personal difference in their main pensions will see it shrink and their future hikes come closer.

As of June, some 250,000 pensioners will also see an increase in their auxiliary pensions from the supplementary social security fund (ETEEAP), concerning retroactive payments from October 1. Their pensions will effectively revert to the level they were at in June 2016.

Upon presenting the bill to the competent parliamentary committee, Labor Minister Yiannis Vroutsis is also expected to submit the necessary actuarial study which he says proves the long-term sustainability of the social security system, as well as the pension sufficiency report, showing that the average living standards of pensioners remain slightly above the national average rate.

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