SOCIAL INSURANCE ON THE TABLE AGAIN: NEW CHANGES IN THE FALL

SOCIAL INSURANCE 

WILL THERE BE NEW DRASTIC CHANGES? WHAT MEASURES WILL THEY COMPRISE?

WHAT IS INCLUDED IN THE NEW MEDIUM TERM FISCAL STRATEGY (MTFS)?

According to the most recent information, the necessity of long-term viability of social insurance and the pressure applied by the Troika on this matter, have brought forth once again social insurance as one of the most crucial issues currently.

Furthermore, the much anticipated I.M.F. report will underline the need for a general restructuring of the social security system.

It is included as an item of the agenda and will be addressed during the next round of negotiations, which will take place in the fall.

POST's Secretariat of Social Insurance notified the Hellenic Post employees of the upcoming changes and the various possible scenarios through its column some time ago.

However, every day there are more and more newscasts and newspaper articles on the radical changes and modifications related to pension age in general as well as to the pension calculation method, especially from 1/1/2015 onwards.

The insured employees are preoccupied with all these recent developments, and for good reason, however, once again we advise yo not to panic.

FORTHCOMING MEASURES:

1. Consolidation of Insurance Funds (3 instead of 7 that exist today)

·        Social Security Institute (in Greek: ΙΚΑ) for employed personnel

·        Agricultural Insurance Organization (in Greek: ΟΓΑ) for farmers

·        Insurance Organization of Freelance Professionals (in Greek: ΟΑΕΕ) for self employed professionals

This new organizational and administrational structure does not concern us, as the ex Personnel Insurance Fund of the Hellenic Telecommunications Organization (in Greek:ΤΑΠ-ΟΤΕ) has been incorporated into the Social Security Institute – Single Insurance Fund of Employees (in Greek: ΙΚΑ-ΕΤΑΜ) since 2008 for those insured under the previous system, and as for the new insured (after 1/1/93), their insurance fund has always been ΙΚΑ-ETAM.

2. Incorporation of Supplementary Insurance Funds to Main Insurance Institutions

Our own supplementary fund (the ex Single Fund of Supplementary Insurance – in Greek: ΕΤΕΑ) was incorporated into ΙΚΑ-ΕΤΑΜ on 2012 as ΤΕΑΠ-ΕΛΤΑ (Sector of Supplementary Insurance for the Hellenic Post Personnel). The insured employees are now addressed only to the Single Insurance Fund of Employees (ΕΤΑΜ – 11-13 Filellinon street, Athens).

Thus, the above organizational modification is also of no relevance to us, however, what does concern us is the well-known “zero deficit clause”, as the insurance funds will be making payments according to it. This means new cuts, even if they are minor reductions of about 5%, taking into consideration the statements of the competent Minister on this matter.

Our fund's supplementary pensions have been reduced by about 50% since the first period of implementation of the memorandums in 2010, and we hope that they will not be completely abolished...

3. New pension calculation method

The articles of Law 3863/2010 provide for a new method of pension calculation which will be applicable from 1/1/2015 onwards, only for those who will establish pension rights from the above date and after.

According to the provisions of this law, for those who establish pension rights until 31/12/2014, the pension calculation method remains the same as under the previous relevant provisions.

As for the definition of the term “establishment of pension rights, we all know the relevant circulars and interpretations.

For those insured until 31/12/1982, the insurance time needed to establish pension rights is of 25 years.

According to Law 3029/2002, for those insured after 1/1/1983 the insurance time required to establish pension rights is of 35 years, with the possibility to have fictitious pensionable years recognized, as provided for by more recent legislature.

Furthermore, pension rights may be established by special insurance categories, such as mothers with underage children who have completed the required pensionable years until 2010, 2011 and 2012 (25 years as well as required retirement age). The same stands for those insured by the Social Security Institute (IKA), who may establish pension rights if they have 18,3 pensionable years and an underage child until 31/12/2012 and have reached the required retirement age.

For women who do not have both requirements (underage child plus pensionable age) until 31/12/2012, the general retirement age requirements are applicable from 1/1/2013 onwards.

Men with at least 25 pensionable years until 31/12/2012 establish pension rights at the age of 60 for reduced pension and of 65 for full pension, but if they complete the above pensionable period of 25 years on 1/1/2013 and after, they will be eligible to retire at the age of 62 and 67 respectively.

So the insured of the above period, depending on the year within which they complete 35 pensionable years, establish pension rights according to the terms and requirements for full pension provided for by the relevant laws for that particular year.

Those who complete 35 pensionable years from 1/1/2013 onwards and have the possibility to have fictitious pensionable years recognized, are eligible for retirement at the age of 62 with 40 years of insurance.

Taking into consideration all the above, the new calculation method relating to basic and proportional pension will be gradually applied to those who will establish pension rights after 1/1/2015, which means that it will not be applicable to most of the insured who will have established pension rights until 31/12/2014.

Since a lot has been said by people who may or may not be experts on these matters and by people who may or may not have special motives and interests, the competent Ministry needs to further clarify certain points of these procedures and appropriately inform the insured.

We only repeat what is mentioned in the text of the relevant law, however, if after 1/1/2015 only the basic pension is guaranteed by the state, this will concern each and every one of the insured employees, since this particular scenario would be equal to the abolition of social insurance and the welfare state.

But until then, the insured should not make hasty decisions which could prove detrimental to their pension rights, especially those who are planning to retire early and receive reduced pension, because the amount of their pension will remain the same, even when they reach the age required for full pension.

In short, the reduction of the pension will be permanent.

4. Early retirement

From 1/1/2015, the minimum insurance time required in order to be eligible to receive the minimum as well as the basic – guaranteed by the state – pension, will be gradually increased.

The above minimum time will increase from 4.500 days of insurance (15 years) to 6.000 days of insurance (20 years).

Moreover, there will be limitations related to early retirement (pension right before the age of 62).

This means that the other insurance categories, especially those who were insured before 1983 and establish pension rights as soon as they complete 35 years of insurance with no pension age requirement, have nothing to worry about. However, we will know exactly what will be discussed and legislated in the coming fall.

POSSIBILITY OF RECOGNITION OF – PAYMENT FOR MILITARY SERVICE TIME (FOR THOSE INSURED AT ΤΑΠ-ΟΤΕ)

After a recent newspaper article which caused many colleagues to worry and ask questions, we need to clarify the following on this particular matter:

According to the provisions of Law 1358/1983, an insured has the possibility to pay for the whole military service time (with the exception of any penalty time) and have it recognized as pensionable time in order to establish pension rights or to increase the amount of his pension.

The amount of the above recognition payment equals 20% of the last total salary payed to the employee at the date of the relevant petition for full pension. The maximum payment sum amounts to 486 euro for each recognition month.

The requirement for military service recognition is the completion of 3.600 days of insurance (12 years) and in order to establish pension right the insured is required to have reached 58 years of age.

Military service time may be added to time needed for supplementary pension, in which case the insured pays 6% of the last salary received on the month of his retirement.

NOTE

The provisions of article 10 paragraph 18 of Law 3863/2010, as currently in force, as well as the provisions of Law 3996/2011, modified the legal framework relating to the recognition of military service time for those who establish pension right after 1/1/2011.

Especially for those who establish pension right from 1/1/2011 until 31/12/2014, the amount they have to pay for the recognition is reduced by 30% and for those who establish pension right from 1/1/2015 onwards, the same amount is reduced by 50%.

In case the whole recognition amount is paid off in one lump sum, a general discount of 15% is granted. This discount also applies to the new reduced recognition amounts for those who establish pension right after 2011.

According to the interpretation and explanations by the officials of the competent ministry and of ΤΑΠ-ΟΤΕ, this reduction provision does not apply to those insured before 1983, as their rights are not affected by the changes related to pension age and insurance time requirements imposed after 1/1/2011, since the insured of this category are eligible to retire as soon as they complete 35 years of insurance with no age requirement.

The insured who completed 25 years of insurance until 31/12/2010 and decide to retire at the age of 60 with reduced pension or 65 with full pension are not entitled to this discount (which applies to those who completed 25 years of insurance until 31/12/2012), since the pension age has remained the same for this category.

Who is entitled to the discount

The following insurance categories are entitled to the discount corresponding to the time when they establish pension right:

1.     Those insured after 1983 who establish pension right after 1/1/2011 according to legislation related to increased time of insurance and pension age, depending on the year within which 35 years of insurance are completed (with the recognition of fictitious insurance time).

2.     Widowed fathers of underage children who establish pension right after 2011 and pay for recognition of military service time in order to fulfill the insurance time requirement.

3.     Widowed or divorced fathers of 3 children (the first category should have at least 1 underage child and the second should have a court decision ordering the divorce) who complete the insurance time required after 1/1/2011.

In all cases, the amount paid should not be less than the daily wages of an unskilled worker, as determined by the relevant provisions in force, multiplied by 25, for each month of recognition.

The recognition and payment of military service time may be effectuated whenever, if the insured knows how much time he needs, but in order to establish pension right, he needs to have reached 58 years of age.

This means that someone who belongs to the insurance category of those insured before 1983, may complete 35 years of insurance at the age of 57 (military service time included), but will not be eligible to receive pension before reaching the age of 58, even if he retires under current provisions.

The possibility to retire with completion of 35 years of insurance without age limit is still in force for those insured until 31/12/1982 who have 35 years of actual insurance time.

Payment for military service time recognition may be effectuated in as many installments as the months recognized or in a one-off payment with 15% discount. This discount is also calculated on the amounts reduced by 30% or 50% for those who are entitled to it.

 

POST Social Insurance Secretariat