Pensions to increase four times by the end of the year

Quadruple amplification pensions They will have it from fall until the end of January 2025. 2.5 million retirees Changes to the way pensions are increased due to the new calculation rule from 2025, the new personal difference allowance, the abolition of the solidarity contribution to supplementary pensions, and the change in the method of deduction for the main pension. In addition, the method of collecting contributions for 1.5 million self-employed people and farmers is changing.

According to the information, the financial staff is discussing the partial return of the social solidarity allowance, which will be combined with changes in the method of calculating increases in the compensatory pension portion starting from the new year, the announcement of which will be made in TIF by the Prime Minister.

In the Katrogallo Law, the calculation of the compensation pension for each new retiree is based on the income included in the pension calculation as it has been established since 2002 and then increases annually with the change in the consumer price index. It should be noted that only positive inflation values ​​are taken into account and not negative ones. The index will be derived from the average salary increases for all employees.

The greater the salary increases, the greater the percentage of increase the insured will receive in his retirement income, and part of the increase goes to the compensation pension.

Thus, starting from the new year, the pension earnings of the insured, which form the basis for calculating the compensation pension, will cease to increase with inflation and will increase with the rate of increase in the wage index for all employees. If the wage index increases by 3.5% in 2024, this rate will also lead to an increase in the salary that will be taken into account for the compensation pension for those who leave in 2025.

For example, an insured person who currently has a pension of 1,700 euros and intends to retire in 2025 with 40 years of insurance, will receive a 3.5% increase in the pension which will be 1,760 euros and a compensation pension of 890 euros. If his income had increased with inflation – as is the case today – the pension would have been 1,740 euros and the compensation pension would have been 870 euros.

With wage indexation, the increase in the compensation pension can be greater than the increase that would occur if the income included in the pension calculation continued to change on the basis of inflation.

New Personal Difference

The second increase in pensions concerns the granting of a bonus in December that will be increaseable from 100 to 200 euros and will be received by 770,000 current pensioners with a personal difference.

The personal difference concerns pensioners until 2016, when their pension was recalculated under the Katrogallo Law and since it was less than what the pensioner received, instead of cutting it, the personal difference was determined as part of the pension, and its wage is paid normally, but pensioners are deprived of annual increases up to zero.

According to estimates by EFKA executives, by 2027 the personal difference will be eliminated for another 450,000 pensioners, who currently record a difference balance of around 70 euros.

Cancellation of EAS in supplementary pensions

The increases will also come from the cancellation of the contribution to supplementary pensions and a reduction in the deduction rate on the main pensions for 550,000 pensioners with pensions of €1,400 and above.

In the bill that Labour Minister Niki Kerameos will present to Parliament by October, the new EAS system is expected to be implemented from 2025 with the abolition of the contribution to supplementary pensions, which will lead to increases for old pensioners in the range of 10-120 euros per month.

At the same time, they will have an additional increase in the main pension by changing the method of deduction, so that the reduction is not imposed on the total amount from 1,401 euros and above but on the excess amount of the difference. For example, a pension of 1,600 euros has a withholding tax of 3%, which is imposed on the entire amount of 48 euros. If it is imposed only on the amount above 1,400, i.e. 200 euros with a slightly increased percentage – for example. 10% – then the contribution amount is 20 euros, and the remaining 28 euros go as an increase in the pensioner’s wallet.

The second solution chosen is more complex and concerns reducing the EAS rates from level 2 and above, by creating new withholding rates, in line with the tax administration rates. Based on this scenario, a 15% withholding would be imposed on the amount of 1,400-2,000 euros (withholding scale up to 90 euros). A 20% withholding would be imposed on pension amounts from 2,000 to 2,500 euros and 25% from 2,500 euros and above.

Linking contributions and increases

Also changing the way contributions are collected for professionals and farmers, with the new year coming by linking contributions to wage increases in 2025.

Under the new system for determining contributions, instead of increasing each year at the rate of inflation in the previous year, they will be linked from 2025 onwards to wage increases in the previous year. If wages increase by an average of 4% in 2024, professional contributions will also increase by 4% in 2025.

There are pros and cons to the new system. There could be larger increases in contributions if wages rise more than the rate of inflation. On the positive side, increasing contributions in line with wage growth will also lead to better pensions if nominal wages rise above the rate of inflation.

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