NEW REDUCTIONS IN PENSIONS FROM 1/1/2013 – CIRCULAR ISSUED BY THE SOCIAL SECURITY INSTITUTE (in Greek characters: Ι.Κ.Α.)

 

NEW REDUCTIONS IN PENSIONS FROM 1/1/2013 – CIRCULAR ISSUED BY THE SOCIAL SECURITY INSTITUTE (in Greek characters: Ι.Κ.Α.) 

The Social Security Institute’s (I.K.A.’s) clarifications on the new pension cuts. Find out which are the new pension scales and who are excluded from the reductions. All relevant information in detailed examples.

An urgent circular issued by the Social Security Institute (I.K.A.) gives instructions on the pension cuts, the calculation method and the exceptions from the reductions.

According to the above-mentioned circular (number 81 dated 14/12/2012), which refers to the relevant provisions of Law 4093/2012, the monthly pension payments will be reduced from 1/1/2013 as follows:

1.      Monthly main pension payments or total pension payments from 1.000,01 euro to 1.500,00 euro are reduced by 5% of the total amount. The amount of the pension remaining after the above reduction shall not be less than 1.000,01 euro.

2.      Monthly main pension payments or total pension payments from 1.500,01 euro to 2.000,00 euro are reduced by 10% of the total amount. The amount of the pension remaining after the above reduction shall not be less than 1.425,01 euro.

3.      Monthly main pension payments or total pension payments from 2.000,01 euro to 3.000,00 euro are reduced by 15% of the total amount. The amount of the pension remaining after the above reduction shall not be less than 1.800,01 euro.

4.      Monthly main pension payments or total pension payments from 3.000,01 euro and above are reduced by 20% of the total amount. The amount of the pension remaining after the above reduction shall not be less than 2.550,01 euro.

THE REDUCTIONS IN TOTAL

The reductions are imposed on all amounts paid as main pensions or total pension amounts (which consist of main and supplementary pensions or dividends, Engineers’ and Public Works Contractors’ Pension Fund (in Greek characters: Τ.Σ.Μ.Ε.Δ.Ε.) special supplement to pensions of any kind (old-age pension, invalidity pension, survivor’s pension), deriving from any institution of social security, the State, the Civil Servants’ Pension Fund (in Greek characters: Μ.Τ.Π.Υ.) as well as any other source.

The reduction is imposed on the total amount of pensions (main pensions-supplementary pensions-dividends) that exceed the sum of 1.000,01 euro per month.

REDUCTION SCALES

The amount of the main pension or the total amount deriving from various sources of pension paid on the 31/12/2012 is taken as base of calculation of the sums mentioned in the above scales (the supplement for total permanent invalidity is included, according to the provisions of article 60 of Law 3518/2006, which replaced the provisions of article 29 paragraph 10 of Emergency Law 1846/51 as supplemented). Thus, the following amounts are taken as base of calculation:

a)     For the main pension, the gross amount remaining after the deduction of the Pensioners Solidarity Contribution (article 38 of Law 3863/2010 and article 11 of Law 3865/2010, as currently in force) and the deductions of the additional contribution provided for by paragraph 11 of article 44 of Law 3986/2011 (issue number 152 A’ of the Greek Official Gazette) as well as the reductions provided for under article 2 of Law 4024/2011 (issue number 226 A’ of the Greek Official Gazette) and under articles 1 and 6 of Law 4051/2012 (issue number 40 A’ of the Greek Official Gazette) and

b)    For the supplementary pension, the amount remaining after the deduction of the Special Contribution of Supplementary Insurance of paragraph 13a article 44 Law 3986/2011 (issue number 152 A’ of the Greek Official Gazette) as well as the reductions provided for under paragraphs 3 and 4 of article 2 of Law 4024/2011 (issue number 226 A’ of the Greek Official Gazette) and paragraph 2 of article 6 of Law 4051/2012 (issue number 40A’ of the Greek Official Gazette).

Only pensioners who receive the non-institutionalized disability allowance provided for under paragraphs 1 and 2 of article 42 of Law 1140/1981 (issue number 68 A’ of the Greek Official Gazette) as currently in force (multiplicity 5) are excepted from the above reductions [circulars 67/1992 (article 16 of Law 2042/1992), 53/2004 (paragraph 2 of article 5 of Law 3232/2004), 44/2012 (paragraph 4 of article 26 of Law 4075/2012), issued by the Social Security Institute-Single Insurance Fund of Employees (I.K.A.-E.T.A.M.)].

The above category also includes pensioners who receive non-institutionalized disability allowance that equals ten (10) daily wages of unskilled workers – single amputees – (paragraph 4 of article 10 of the communicated Act of Legislative Content).

Thus, it is understandable that the pensioners who do not receive the non-institutionalized disability allowance themselves [but have another member of their family indirectly insured and this family member is the person who is actually entitled to said allowance (multiplicity)] are not excepted from the above reductions.

In case of survivor’s pension to which more than one persons are entitled, the total amount of the pension exceeding the amounts mentioned in each of the above scales is reduced according to the respective percentage; the remaining amount is distributed to the recipients according to their participation percentages.

In case a person is entitled to survivor’s pension together with other members of the same family and at the same time receives the non-institutionalized disability allowance – and thus is excepted from the reduction – the amount that equals this person’s participation percentage to the pension is deducted from the total sum taken as base of calculation of the reduction.

The reductions provided for under sub-paragraph IA 5 of article 1 of Law 4093/2012 will be applicable as from February 2013, whereas the reductions with retroactive effect related to pensions of January 2013 will be deducted from the pensions of February to May 2013 in 4 equal monthly installments.

Finally, in the case that a person receives more than one pensions, the amount resulting from the reduction is distributed accordingly to each one of the pensions, taking as base of calculation the amount of each pension before the reduction; the amount of the reduction is deemed revenue of the respective social insurance institute from which each pension derives.

The same circular includes instructions to the Social Security Institute’s (I.K.A.’s) various branches.

In particular, it is noted that the cases of exceptions that were entered in the Electronic Data Processing System Departments under incorrect legal basis, shall have to be re-registered under the correct legal basis. However, since the reductions will have been made, the corresponding sums shall be returned to the beneficiaries via non-electronic procedure.

Furthermore, in case that the non-institutionalized disability allowance was paid after the pension and for this reason the pensioner was not excepted from the reduction, the deducted sums shall be returned via non-electronic procedure.