The improvements recently announced by Labour Minister Marinos Mousiouttas, with the exception of the issue of dividends, are incorporated in the revised bill sent to the social partners yesterday afternoon.
The changes concern bringing forward pension increases so they are paid within three years instead of five, extending the transitional period from five to 15 years, and ensuring that there will be no pension cuts, nor increases in contributions or the retirement age.
Whether by oversight or not, the bill does not include the new arrangement announced by Mr Mousiouttas on the social insurance contributions of employees who are also shareholders in their companies. While it was originally foreseen that contributions would be paid on the sum of salaries and dividends up to the maximum insurable earnings ceiling, according to the minister’s statements, the obligation will be limited to income equal to two basic insurable units, that is, approximately €23,000 a year.
The changes
Among the most significant amendments is the acceleration of the increase in the full basic pension. While the original draft provided for gradual implementation over five years, the transition will now be completed in three years. In the first year of implementation, 30% of the increase resulting from the new method of calculation will be paid, in the second year the percentage will rise to 60%, while from the third year onwards pensioners will receive the full (100%) increase.
According to examples recently made public by the Ministry of Labour, increases for low-income pensioners may reach up to 50%. For example, a pension of €411 with 30 years of contributions and seven credited years rises to €577, and a pension of €508 with 42 years of contributions and seven credited years rises to €764.
The bill does not include the new arrangement for the social insurance contributions of employees who are also shareholders in their companies
For low to middle incomes, increases reach up to 34%. For people with 25 years of contributions and seven credited years, the pension rises from €497 to €667, while for people with 42 years of contributions and seven credited years it rises from €762 to €976.
Pension increases for middle incomes reach up to 11%. Specifically, for people with 25 years of contributions and seven credited years, the pension rises from €921 to €1,019, while for people with 35 years of contributions and seven credited years it rises from €1,258 to €1,341.
According to the examples, no reductions are recorded for high incomes, while in some cases there are small increases. Specifically, for people with 25 years of contributions and seven credited years, the pension rises from €1,223 to €1,271, while for people with 35 years of contributions and seven credited years it rises from €1,706 to €1,713.
Supplementary pension
At the same time, the method of calculating the supplementary part of the pension has been changed. During the 2027 to 2041 transitional period, the rate will be 1.25%, while from 2042 it will rise to 1.35%, instead of the 1.34% provided for in a previous version of the draft. During the transitional period, the existing and new systems will be compared and the higher pension amount will be paid.
At the same time, the bill does not include the legislative establishment of a mandatory investment policy and the creation of a special investment management body and a separate supervisory mechanism by 2031, which is an important aspect regarding the possibility of a future increase in contributions to the Social Insurance Fund. What is recorded is that, as part of an actuarial review during the first ten years from the entry into force of the Social Insurance (Amending) Law of 2026, it will also be examined whether the said increase negatively affects the long-term sustainability of the fund and, in such a case, if a new investment policy has not been implemented, measures will be taken to ensure its long-term sustainability.
At the same time, regarding the establishment of pension rights, the stricter conditions included in previous versions of the draft for disability and widow’s pensions have been permanently removed.
At the same time, the revised bill includes the recognition of notional pensionable earnings for parents for raising children, informal carers, persons with disabilities, students and new entrants to the labour market.
Outstanding issues
Despite the improvements to the bill, a number of outstanding issues remain. One of the main issues concerns the 12% actuarial reduction. The government is seeking solutions that will not increase the overall fiscal cost of the reform.
The trade unions argue that the issue cannot be judged solely on fiscal criteria, as the conditions of early retirement differ among workers.
As regards provident funds, the Technical Committee will meet today and the social partners have been invited to submit their positions, with a new session on 27 October. On 29 October, the issue will also be brought before the Labour Advisory Board, where the government is expected to show its hand.
The trade unions made clear that existing provident funds built through collective agreements should not be affected by the reform.
The issue of support for low-income pensioners also remains open, with a request for the eligibility criteria to be reviewed and for data on the number of pensioners who will continue to receive a pension of below €900 a month after the reform is implemented. Finally, the issue of the widower’s pension for men who lost their wives before 1 January 2018 also remains open.
