Modern pensions show significant reductions compared to previous decades. The Katrougalos legislation, low incomes, flexible employment relationships, and limited insurance contributions from freelancers create the problem faced by future retirees. Official data from EDIKA reveals that the average pension amounts to €842.21, while the old-age pension reaches €949.43. In contrast, former public employees receive an average of €1,317.43 monthly.
Critical mistakes that reduce pensions
Social security experts highlight specific pitfalls that insured individuals must avoid. Early retirement with reduced benefits results in a 6% cut per year, with a maximum limit of 30% over five years. This reduction applies exclusively to the national pension. To secure optimal retirement benefits, a high average salary from 2002 until the application submission date is required. Additionally, completing 40 years of insurance, either through actual work or notional years, constitutes a fundamental prerequisite.
The cost of free insurance days
The reduction in the national pension due to early retirement has a maximum limit of €130 monthly. However, there are hidden traps that many ignore. A characteristic example is an insured person with a pensionable salary of €2,500 from 2002, who recognizes one year of subsidized unemployment and one year of illness for free. Although receiving 600 insurance days at no cost, they lose €127.5 monthly from their pensions. The reason lies in the calculation method: while completing the 12,000 insurance days for 40 years, they actually have only 38 years of insurance. Consequently, the average pensionable salary is multiplied by a 5.1% lower percentage for calculating the contributory pension.
The importance of 40 years of insurance
The crucial point for adequate pensions is completing 40 years of insurance. An insured person who has established retirement rights with 35 years but doesn’t recognize notional years up to 40 years loses approximately 13% from the contributory pension.
For pensionable salaries above €2,000, this means a loss of €260 monthly. Therefore, insured individuals must not only pay for the notional years they recognize but also ensure that the recognition doesn’t reduce the average of their earnings from 2002 to the retirement date.
What you should pay attention to
Specifically, to benefit from retirement, one has the following options:
1. Complete 40 years at work. From 35 to 40 years of insurance, the contributory pension increases by 2.55% for each year, above 40 years only by 0.5% per year.
2. Upon retirement, be able to start their own business without any impact on their earnings. Conversely, receive a respectable amount from EFKA, which cannot be less than €1,000 per month (with 40 years of insurance). Simultaneously, avoid paying additional insurance contributions.
3. Retired freelancers, with an additional burden of €90 per month to EFKA, avoid the presumptions of self-employed individuals. While on the same (commercial) street, for example, the professional neighbor must pay tax for a net income of at least €14,000-15,000, even if they didn’t have such turnover last year, the retired freelancer justifies living presumptions with their pension. For non-employees with 33 years of insurance, pensions range from €728 gross in the 1st category to €1,377 in the 6th. At 35 years, the 1st category professional reaches €773, while the 5th category exceeds €1,200. At 40 years, the gap widens further: €888 for the 1st category versus nearly €1,900 for the 6th.
4. Remaining at work while eligible for full pension, an insured person risks receiving a (slightly) higher gross pension above €1,431 and paying the Solidarity Contribution (EAS).
5. With 38 or 40 years in insurance, the supplementary pension percentage is 18%-19%. With a pensionable salary of €1,700, a supplementary pension above €300 gross per month results.
6. A strong incentive for retirement and simultaneous continuation of employment is the new regulation providing that pension increases for retiree work (€7.5 for each year per €1,000 salary) will not be subject to EAS.
