ECONOMY

Pay as you earn for auxiliary pensions

Pay as you earn for auxiliary pensions

The government’s major social security reform will be promoted in 2021, following the necessary economic and actuarial studies and public consultation. Its main focus will be on the creation of a deposit system in auxiliary pensions.

This is based on the idea that the contributions of salary workers who have just entered the system will not be used for the payment of today’s auxiliary pensions, but instead form the pension capital of each individual worker.

The changes will be directly associated with simultaneous interventions in contributions and the labor market, with the government’s new deputy minister for social security, Panos Tsakloglou, well aware that a necessary condition for a healthy and sustainable pension system is a strong first pillar for the unhindered payment of main pensions.

At the same time, however, he is in favor of a supplementary, pay-as-you-earn pillar through a public auxiliary fund that will operate independently of the existing professional pension funds, within a transparent and efficient institutional and investment framework. This will also have to be in the context of political and social consensus.