The relevant ministries of Finance and Labor are proceeding this summer with the promotion of a “social contract” for workers and retirees, featuring interventions in the insurance system that will significantly boost the incomes of low-pension recipients, while also providing increases to higher pensions. At the same time, measures are being planned that Prime Minister Kyriakos Mitsotakis will announce at the Thessaloniki International Fair and will be implemented from
2027. According to sources, two scenarios are being examined:
*The first provides for an additional increase of 50 or 100 euros to the special allowance of 300 euros that low-pension recipients receive at the end of November each year. The 376,553 widow pension beneficiaries, 172,643 disability pensioners, and 33,444 uninsured elderly are expected to be added to the main benefit recipients.
* The second scenario relates to the partial horizontal restoration of Christmas, Easter and summer bonuses. That is, amounts for all pensioners in the range of 250, 100 and 100 euros. In case this scenario prevails, there will be no increase in the special allowance for low-pension recipients, which will remain at 300 euros.
Ministry of Labor: Bill in July
Furthermore, the bill being prepared by the Ministry of Labor and to be submitted in July will include:
1. Social contract between government and employer organizations for lower non-wage burdens (contribution reductions), in exchange for higher wages and more hiring, to offset the loss EFKA will have, since every 1% reduction in contributions creates a fiscal burden of 420 million euros. A 0.50% reduction has already been voted and will be implemented from January 2027, with another 0.50% remaining. However, despite the 5.4 percentage point reduction in contributions since 2019 (the total insurance deduction rate has been reduced from 40.56% to 35.16% today), the system’s collection capacity has not been negatively affected. With the new planned reduction in 2027, the rate is expected to further decline to 34.66%, further strengthening wages and reducing non-wage costs for businesses.
2. Survivor pensions. According to the plan, the pension will return to 70% for widow pensioners, instead of the 35% that surviving spouses currently receive. For the 12,000 public sector pensioners, retroactive payments are expected from the cuts they suffered, either in installments or through offsets (reductions) in income tax. In the private sector, there will be no returns and retroactive payments, since the law (for 35%) was not implemented.
3. Professional funds. The recalculation method for pensions will change for special categories, such as notaries and insured persons of the former ETAA and TSMEDE, following Council of State decisions. The decisions “demolish” the Katrougalos law, as pensioners received, until the publication of the decision, contributory pension from the special increase based on their status – freelance professionals and insured persons in former ETAA-TSMEDE as salaried engineers employed in the public sector -, resulting in huge deviations in the paid amount of contributory pension and naturally creating huge inequalities and injustices among insured persons of the same insurance fund.
4. Complete abolition of personal difference. With the abolition of offsetting increases and personal difference, pensioners who have large personal difference (150 euros and above) will receive increases every year, while if offsetting remained they would see increases after 5 or even 10 years.
5. Abolition of temporary pension in private and public sector. The issuance of pensions within one month from the coming autumn leads to the abolition of the pre-retirement regime in the private sector as well. Insured persons will directly receive the final main pension provided they have completed all years of insurance, without successive or parallel insurance.
6. Greater incentives for pensioner employment. The small return that contributions paid by pensioners who continue to work give to the pension is under review, where each year of insurance corresponds to a 0.77% salary increase as an extra amount in the pension, and the possibility of the replacement rate reaching 0.90% is being examined.
7. Reconnection of public sector pensions with active employee salaries. The regulation was included in the Ministry of Finance bill and provides for linking active salaries with public sector pensions at 80%. The increase is estimated to average 100 euros monthly, while already retired beneficiaries will also receive retroactive amounts resulting from the new calculation.
8. Changes in Solidarity Contribution withholding. The new model provides for calculating the contribution only on the amount exceeding
the specific scale (as taxation works) and not on the entire pension amount.
Published in “Kyriakiatiki Apogevmatini”.
