ECONOMY

Social security changes favor pensioners

The new year will bring about several changes in social security, some favorable to would-be pensioners and some not. Most of these changes are the result of new legislation passed this summer. But some are the result of an older law, implemented 10 years earlier by the then conservative government. Retirement age increases by six months. This is one of the few provisions of the earlier law left intact. Its aim is to raise retirement age from 60 to 65 years. This provision kicked in in 1997 and will gradually increase the retirement age to 65 by 2007. In 2003, the retirement age is 63 years, up from 62.5 in 2002. Exempt from this provision are those insured by the Social Security Foundation (IKA), the largest private-sector pension fund, the professionals and merchants fund (TEVE) and farmers. A provision in the new law providing pensions to IKA-insured employees who did not make up the minimum required amount of 4,500 working days, but have worked at least 3,500 days. These people will earn a very small pension, ranging from 195 to 260 euros per month. Civil servants’ pensions will be calculated including an amount of 176 euros per month so far given as bonus, and thus not included in the calculation of the pension. They will have to pay an extra 11.74 euros per month in social security contributions. As a result of the previous provision, civil servants’ pensions will increase by an average of 28.17 euros per month in 2003. The increase will be capped at 140.87 euros in 2007. Civil servants’ auxiliary pensions will increase by 5 percent, in most cases. Retired sailors will see their pensions rise by an additional 2.5 percent. The aim is to set the pensions at 70 percent of the average salary during their last five years of employment, from 60 percent currently. Employees in so-called «hazardous and health-threatening» jobs will be given more time – 13 years instead of 10 – to collect their last 1,000 daily wages. Those wishing to retire earlier will see a less severe cut in their pensions. Under the previous law, people retiring five years earlier would get 70 percent of a «normal» pension. Now, they will get 77.5 percent. The same provision, under more favorable terms, extends to employees of public utilities. About 150,000 TEVE contributors will see their contributions increase by 32 percent.