The bill currently under parliamentary debate introduces “open” Occupational Pension Funds (OPFs), allowing both small and large businesses to participate, while insured members from other funds can also transfer their assets. The 8 changes introduced by the bill are linked to tax caps at retirement, the creation of health programs, and a third pension that can reach up to €700 per month, depending on how long a person remains in the system.
Read also: Pensions: What’s changing and who stands to benefit – the new data in full
In essence, these are supplementary pensions ranging from €300 to €700 per month for 20–25 to 35 years of insurance coverage. The pension amount that new insured members can receive from an occupational pension fund will depend on the length of coverage, age, contributions paid, and the fund’s long-term viability. Alternatively, instead of a monthly pension, a member may choose to receive a one-time lump sum payment, which can reach up to €100,000.
The major changes coming to pensions
Pensions are paid for life and, based on current projections, could range from €200 to €300 per month for approximately 20–25 years of insurance, and up to €500–€700 for 35 years of coverage. For self-employed professionals in particular, occupational pension funds will offer a way to increase their benefits, as the pensions they currently receive are among the lowest due to the reduced contributions they pay. Currently, there are 33 OPFs in Greece — 29 voluntary and 4 mandatory — covering 222,671 workers, representing 4.85% of the economically active population and 5.97% of those employed in the labor market.
Who is eligible
-
The creation of “open” multi-employer funds drawn from similar industries and small businesses, in which workers from other sectors — as well as non-salaried workers and the self-employed — will also be eligible to enroll, without requiring each employer to establish a separate fund. Multiple employers will be able to participate in these multi-employer funds, and businesses will be able to join without requiring separate regulatory approval each time. Oversight will be handled by the Bank of Greece.
-
OPFs will be granted the ability to offer health programs to their members, provided the associated risk is fully covered by an insurance or reinsurance company, or by a healthcare provider through a fixed per-capita cost contract. Family members of the directly insured will also be eligible for coverage.
-
Members will be allowed to remain in the occupational insurance system even in the event of job loss (unemployment). This means that losing a job will no longer automatically result in a break in occupational insurance coverage.
-
The free transfer of pension rights from private insurance to an occupational pension fund and vice versa will be permitted, enabling insured members to choose the provider and program that offers the best benefits.
-
Banks will be allowed to enter the occupational insurance space through the creation of investment funds that any insured worker — regardless of sector — can join, with or without employer contributions.
-
Tax reductions will be tied not to the level of benefits, but to the retirement age threshold. Currently, taxation is high, starting at 20% for benefits corresponding to up to 5 years of insurance, and gradually decreasing to 5% for those insured for 20 years or more. Under the new framework, similar reductions will apply to those who retire after age 62, while taxation on the lump sum will be minimal for those who retire at age 67.
-
The Group Occupational Retirement Insurance Product (GORIP) is being established. This product will be issued by insurance companies and will offer insured members protection equivalent to that provided by OPF programs. It will be subject to strict supervision by the Bank of Greece. This new product falls under the second pillar, governed by the same rigorous regulatory framework that applies to OPFs and offering the same favorable tax incentives.
-
An information platform will be created, allowing insured members to monitor and compare their entitlements.
The new model is expected to significantly broaden participation in the second pillar of insurance (supplementary occupational pensions beyond the state pension), as it will allow workers at smaller companies to gain access to occupational pension schemes. Additionally, a relaxation of the current restrictions on multi-employer arrangements is being considered, so that companies from different sectors — not just those in similar lines of business — can participate. Particular emphasis is also being placed on enhancing the mobility of insured members. For the first time, the transfer of pension rights from one OPF or GORIP to another will be formally established, without any loss to the insured member.
The regulatory framework
Once the reforms earmarked for occupational pension funds are implemented, the new insurance structure will include:
- The public insurance system as the first pillar, comprising the main and supplementary state pension, both guaranteed by the government.
- The second pillar, consisting of pensions from occupational pension funds, which are not state-guaranteed but remain under state supervision.
- The third pillar, which is private insurance through retirement programs offered by insurance companies.
- Businesses stand to benefit through incentives to attract and retain employees, as well as the ability to provide employer contributions through collective agreements.
Originally published in Apogevmatini
