CALCULATION OF PENSION PAYED BY THE PERSONNEL INSURANCE FUND OF THE HELLENIC TELECOMMUNICATIONS ORGANISATION (ΤΑΠ-ΟΤΕ) AND THE PENSION REDUCTIONS
WHAT CHANGES AT ΤΑΠ-ΟΤΕ FOR EVERYONE FROM 2015 AND FROM 1/1/2013 FOR THOSE INSURED BEFORE 1983
After the last modifications in the laws concerning insurance and pensions and the new pension ages required for those who have not established pension rights until 31/12/2012, one major question is being posed by all those concerned, even those who have already established pension rights.
IS IT TO MY BENEFIT TO RETIRE?
WHAT PENSION SHALL I BE ENTITLED TO?
Will the salaries remain the same during 2013 or will they undergo new cuts, leading to further reduction of the sum taken as base of calculation of the pension? What will happen to compensations, salary maturations etc?
All the above are reasonable questions asked by our members every day, which our union tries to answer in the most satisfactory way.
POST is trying its best to avoid further reductions, however, the memorandum period has been longer than anticipated, making the situation unsure; this neither means we should start overreacting nor that we should give up and be subdued.
The fact that – until now – we haven’t been in the eye of the storm, like others have, did not just happen because we’ve been lucky and you, our members, know that.
For the time being, it seems we are not the direct targets of these changes.
It is a fact that on many occasions, either the Hellenic Post (ΕΛ-ΤΑ) or the government have tried to interfere with what’s left of our rights and so far we’ve been able to prevent it.
However, since today’s decisions may be tomorrow’s choices, we hereby inform you on the general situation and the requirements concerning pensions at present, so that those of you who have established their right to pension know all the necessary details that will help you make a decision to your benefit, while answering the dilemma below:
Salary or pension? What will the sum be in each case?
The numbers – that do not always speak the truth – are revealing in this case.
There are various “techniques” for calculating pensions at the insurance organizations of the public utility corporations (in Greek: ΔΕΚΟ), with the total sum of the pension depending on the year of insurance. It is characteristic that there are differences even among those insured under the “old system”, as for each year of insurance after 1/1/2008 a different coefficient applies.
It is particularly significant that even one day of insurance at any Insurance Organization before the year 1983 is enough to classify the insured under the “old system” insurance category.
This provision applies to ΤΑΠ-ΟΤΕ – which insures the personnel of the Hellenic Post (ΕΛΤΑ), the Hellenic Telecommunications Organization (OTE) and the Hellenic Railways Organization (ΟΣΕ).
Regarding premature retirement, you should keep in mind that the reduction rate ranges from 6% (0,5% per month) to 30% (according to the year when the right to full pension is established), for those who choose to speed up their retirement by 5 years.
As a conclusion, the insured should be particularly careful before taking such a decision, as this reduction is permanent.
POST’s Insurance Secretariat informs you on the relevant changes and analyses for you the method of calculation of the pensions applied by ΤΑΠ-ΟΤΕ, giving you all the details at its disposal, so that, with a little effort from your part, you will be able to calculate your pension on your own (more or less), as the total sum of the pension depends on the salary taken as its base of calculation, any individual reductions, family allowances or any other specific circumstances (post-graduate degree, position of high responsibility etc) that affect an individual’s salary.
It is clear that the amount of the pension no longer depends solely on the years of insurance, as it used to previously.
Nowadays we need specialized knowledge, even expert professionals to calculate our pensions (at a price of course) and even then, you can be sure that you’ll never know the total and final sum of your pension, because new reductions are applied every now and then; however, if you make the effort, you’ll be able to make an approximate estimation of the amount of your pension.
The pensions of the personnel of OTE (Hellenic Telecommunications Organization), ΟΣΕ (Hellenic Railways Organization) and ΕΛ-ΤΑ (Hellenic Post) are paid by our Insurance Fund. Despite its integration to the Social Security Institute-Single Insurance Fund of Employees (in Greek: ΙΚΑ-ΕΤΑΜ), our institution preserves its statutory provisions regarding retirement requirements (as developed after L. 3863/2010) as well as the method of calculation of the amount of the pension. However, those provisions are not applicable in every single case and they will not remain as they are forever, as we explain below:
The method of calculation of the final amount of the pension varies according to the year of the initial insurance. Thus, apart from the specific calculation method applicable to those insured under the “new system” (2% per year for those who started working for the first time after 1/1/1993), there are also variations in the calculation method applicable to those insured before and after 1/1/1983.
For those initially insured from 1/1/1983 to 31/12/1992:
The pension is calculated on the basis of 80% of the last salary (taken as base of calculation) plus 1/35 per year completed until 31/12/2007.
From 1/1/2008 onwards, the coefficient is reduced by 1% per year and by 2017 it will be 70% of the average salary of the 5-year-period prior to the retirement month.
The final amount of the pension paid to the insured consists of the total sum of the two sums mentioned above, i.e. the sum corresponding to the years of insurance completed until 2007 and the sum of the pension corresponding to the years of insurance completed from 1/1/2008 onwards.
As provided for by the provisions currently in force and as we have repeatedly stated through this column, the years calculated for establishment of the right to pension should always be full years, that is 300 days per year, e.g. 25 full years, not 24 years and 7 months.
However, regarding the method of calculation of the pension and about the non-full years of insurance, we clarify the following:
For calculation of pensionable time, in the first place you add up the full years of the total period of insurance (before and after 31/12/2007), and then you add the non-full years (if any) to them.
In case the above sum (of the non-full years) corresponds to more than six months, then this time (6 months plus at least 1 day), which is considered as one full year only for calculation of the pension increase and not for the establishment of the right to pension, is used for the calculation of the amount of the pension and added to the insurance time completed before or after 31/12/2007, depending on when most insurance time was completed.
Some illustrative examples:
- The insured has completed 16 years, 3 months and 10 days until 31/12/2007 and 17 years, 4 months and 2 days after 1/1/2008. The total insurance time is of 33 years, 7 months and 12 days. With the application of the above statutory provisions, the above period of time counts as 34 pensionable years. 16 of those are considered as completed before 31/12/2007 and 18 as completed after 1/1/2008.
- The insured has completed 15 years, 6 months and 10 days until 31/12/2007 and 16 years, 0 months and 5 days after 1/1/2008. The total insurance time is of 31 years, 6 months and 15 days, which counts as 32 pensionable years. 16 of those are considered as completed before 31/12/2007 and 16 as completed after 1/1/2008.
Regarding L. 3029/2002 and circular Φ45/ΙΟΚ.1895/21/10/2002 by the General Secretariat of Social Security (in Greek: Γ.Γ.Κ.Α.), it should be noted that neither of the above mentions calculation of the pension at the basis of days of insurance, for the part of the pension corresponding to the period of insurance from 1/1/2008 and after.
CALCULATION OF PENSION FOR THOSE INSURED UNTIL 31/12/1992
THE NEW PROVISIONS IN FORCE FROM 1/1/2013 ONWARDS
The pensionable salary consists of two parts:
A. The amount of the pension corresponding to the years of insurance until 2007 = pensionable wages of month of retirement x years of insurance x 80%/35
B. The amount of pension corresponding to years completed after 2008 = average of wages of the last 5 years x years of insurance x coefficient of year of retirement/35.
DIFFERENT CALCULATION METHOD FOR OTHER INSURANCE CATEGORY:
For those who were initially insured at our Insurance Fund before 1/1/1983 and have retired until 31/12/2012, their pension is calculated as follows:
· For 15 years of insurance they receive 50% of the pensionable salary
· For each additional year the above percentage increases by 2%, until 80% of the pensionable salary is completed. For example, for 30 years of insurance completed until 31/12/2007, the insured receives 80% of the last pensionable salary, but does not receive any sum for the years completed after 2008.
· If the insured has completed less than 30 years until 2007, as is the majority of the cases now, then:
§ For the years of insurance completed after 1/1/2008, the same provisions as for those insured after 1983 will apply, and the years of insurance will be calculated in 35ths, according to the number of years needed for completion of the maximum percentage of 80%, which applies according to the statutory provisions of our Insurance Fund.
§ Those who wish to receive more than 80%, have to remain employed after completion of 35 years of insurance and will receive a 2,5% increase for each year until completion of 37 years and a 3,5% increase for each year until completion of 40 years of insurance.
This method of calculation of the pension that was provided for by L. 3029/2002, which preserved the favorable provisions of the Insurance Fund’s statutes regarding those insured before 1983, has been repealed – from 1/1/2013 – by L. 3655/2008 and circulars 10/10/2012 issued by the Social Security Institute (ΙΚΑ) and 33064/2228/2008 issued by the General Secretariat of Social Security (ΓΓΚΑ).
As a result, even for those insured before 31/12/1982 but who retire after 1/1/2013, the same method of calculation of the pension will apply as for those insured between 1983 – 1992, i.e.: the time of insurance will be calculated in 35ths as follows:
· a) pensionable salary x years of insurance until 2007 x 80%/35, b) average of wages of the last 5 years x years of insurance after 2008 x % of year of retirement (75% for 2012)/35.
· The new coefficients for the 5 years (after 2008) are: 75% for 2012, 74% for 2013, 73% for 2014, 72% for 2015, 71% for 2016 and 70% for 2017.
· The sum of the two amounts above constitutes the final pensionable salary, which includes: the salary class, the seniority premium, the degree increment corresponding to the 14th salary class (959) x the acquired seniority premium and the regulation allowance.
· After that, the family allowance is also added.
· On the same sum, the deductions for the pension reductions are also made, depending on the amount of the pension and the pension age for those under 55 or 60 years of age, as provided for by the provisions in force and as described below.
· The new calculation method for those insured before 1983, results to reductions to the final amount of the pension depending on the year of retirement – if the insured retires until 31/12/2012 or after 1/1/2013 – and varies in each case.
· The final net amount of the pension (the difference) will be reduced by 2% to 3,5%, more or less.
· This means that the difference between those insured before 1983 who retire in 2012 and those who retire in 2013, with pensionable salary from 1.900,00 € to 2.300,00 €, ranges from 25,00 € to 50,00 €, depending on the year of retirement.
· This sum includes all reductions and taxes with the relevant coefficients and scales until 2012.
· The amount is not huge neither is it insignificant nowadays; however, the amount of a pension calculated at the basis of current salaries may be very different from the amount of a pension calculated at the basis of salaries of previous years, thus, in order to take the final decision, one should take into account the current provisions in force related to salaries and pensions.
· And this because the current political orientation is to classify almost everybody at the lowest pension scale, regardless of their years of insurance or the amounts of social security contributions they have already paid.
· At this point we should remind you that, unlike the insured at the Social Security Institute (IKA), those insured at ΤΑΠ-ΟΤΕ (Personnel Insurance Fund of the Hellenic Telecommunications Organization) under the “old system” as well as their employers, are currently paying insurance contributions increased by 40%; even after their integration to the new single insurance fund, nothing changes for them.
PENSION FROM 2015 ONWARD:
Despite the fact that currently a new insurance legislation concerning contributions and benefits after integration of the various insurance funds is under discussion, we should keep in mind that for those insured before 2011 who will retire after 2015, a different way of calculation of the pension based on a mixed system will apply.
The final sum of the pension will originate from the sum of the main (basic) pension and the proportional pension.
The application of the basic pension system will start from 2015 and its sum will be of 360,00 euro, with a transitional period.
From 2015 onward, the proportional pension will be given with the basic one; it will be calculated with the new system, with coefficients up to 1.5% (today they are 2%), depending on the years of insurance from 2011 onward. The years up to 2011 will be calculated with the current system, provided that it stays the same until then.
It is certain that there will be new, bigger reductions, up to 7% (according to the Ministry) or up to 30% (according to the unions). In any case, the new way of calculation from 2015 onward will amount to 64% of the salary instead of 80% up to 70% as it is today.
The pensions have already been reduced by 40% to 50%.
IN WHAT WAY AND HOW MUCH ARE THE PENSIONS REDUCED?
So far there are five legislated pension reductions:
The reductions after the modifications from 1/1/2011 onwards (and according to L. 3863 art. 38 par. 2) are as follows:
1. A special solidarity contribution is imposed from 1/8/2011 on all pensioners and on the total amount of the pension, as below:
For pensions up to 1.400,00 euro, the reduction does not apply
a) For amounts from 1.400,01 euro up to 1.700,00 euro: 3% = 51,00 euro
b) For amounts from 1.700,01 euro up to 2.000,00 euro: 6% = 120,00 euro
c) For amounts from 2.000,01 euro up to 2.300,00 euro: 7% = 161,00 euro
d) For amounts from 2.300,01 euro up to 2.600,00 euro: 9% = 234,00 euro
e) For amounts from 2.600,01 euro up to 2.900,00 euro: 10% = 290,00 euro
f) For amounts from 2.900,01 euro up to 3.200,00 euro: 12% = 384,00 euro
g) For amounts from 3.200,01 euro up to 3.500,00 euro: 13% = 455,00 euro
h) For amounts from 3.500,01 euro and more: 14%
After the deduction, the remaining sum may not be less than 1.400,00 euro (the reductions of the in-between amounts are different of course).
2. In addition, a special monthly contribution for those under 60 years of age applies as from 1/8/2011 (L. 3986, art. 44, par. 11).
From 1/8/2011, apart from the pensioners solidarity contribution, an additional monthly contribution is imposed on those who receive their pension from ΙΚΑ-ΕΤΑΜ and who have not yet completed 60 years of age, whose pension amounts to more than 1.700,00 euro.
The additional contribution imposed on the above pensioners is calculated on the total amount of the pension that remains after the deduction of the pensioners solidarity contribution mentioned above.
The percentages of the additional deduction on the total amount of the pension are as follows:
a) For pensions from 1.700,01 euro (total sum remaining after the first deduction) up to 2.300,00 euro: 6%
b) For pensions from 2.300,01 euro up to 2.900,00 euro: 8% on the total amount
c) For pensions from 2.900,01 euro and more: 10% on the total amount
The above deduction ceases one month after the insured completes 60 years of age and only certain special categories of insured (such as disabled etc) are excepted from it.
3. A. According to L. 4024/2011, from 1/11/2011 a reduction of 40% is imposed on main pensions amounting to more than 1.000,00 euro for those under 55 years of age and up to the gross amount remaining after deduction from the total sum of the pension: a) of the pensioners solidarity contribution (art. 38 of L. 3863.2010 as currently in force) and only if the remaining amount is more than 1.700,00 euro, and b) of the additional contribution of par. 11 art. 44 of L. 3986/2011 (and until completion of 55 years of age).
3. B. A reduction of 20% is imposed on the main pensions exceeding the amount of 1.200,00 euro, for those who do not fall under the above category 3. A. This reduction is imposed on the sum of the main pension remaining after deduction from the total main pension sum: a) of the solidarity contribution and b) of the additional contribution in force from 1/8/2011.
4. Monthly main pensions that amount to more than 1.300,00 euro are reduced by 12% from 1/1/2012 (L. 4051/2012). The base of calculation of the reduction is the amount remaining after the above 3 reductions and cannot be less than 1.300,00 euro.
5. The new (fifth) reduction is imposed from 1/1/2013 onwards, on the sum of the main and additional pension, if the total amount is more than 1.000,00 euro, according to the scales below:
- for amounts from 1.000,00 euro to 1.500,00 euro a reduction of 5% is imposed on the total sum and the remaining sum of the pension shall not be less than 1.000,00 euro.
- for amounts from 1.500,01 euro to 2.000,00 euro, a reduction of 10% is imposed, and the remaining sum of the pension shall not be less than 1.425,01 euro.
- for amounts from 2.000,01 euro to 3.000,00 euro, a reduction of 15% is imposed and the remaining sum shall not be less than 1.800,01 euro.
- a reduction of 20% is imposed on amounts over 3.000,00 euro.
The fifth reduction is imposed on sums remaining after the previous reduction on the main as well as the additional pension, which are also reduced accordingly.
EXAPMLE: An insured whose main pension amounts to 1.550,00 euro and the additional pension to 250,00 euro. With a total pension amount of 1.800,00 euro, the above insured falls under the 10% reduction scale and a reduction of 180,00 euro is imposed on his/her pension. From this amount, 155,00 euro is deducted from the main and 25,00 euro from the additional pension.
You should not forget that the same prerequisites for establishment of the right to main pension are also required for establishment of the right to additional pension.
In case you need more time for completion of the insurance time requirement, in order to be entitled to additional pension, then, if you were previously insured for additional pension at another insurance fund and you were successively insured at ΤΑΠ-ΟΤΕ, you'll have to wait for the competent insurance fund's answer to our insurance institute. In case you did not have additional-pension-insurance before ΤΑΠ-ΟΤΕ, then in your application for pension to our insurance institute, you'll have to ask for recognition of insurance time through repayment; when the decision concerning your pension is issued, you'll have to notify our additional-pension department yourselves and subsequently pay for the required insurance time with a 10% discount – if you opt for a one-off payment; in this case, you'll start receiving your pension from the date of dismissal. In case you wish to pay in installments, you'll start receiving the additional pension after the last of the installments is fully paid.
In case of retirement with reduced pension, which certain categories of insured are entitled to (e.g.: 50 or 55-year-old women and 60-year-old men with 25 years of insurance may retire at a younger age than the age required for full pension), the amount of the pension was reduced by 4,5% until 2010 and from 2011 onwards by 1/200 for each month needed for completion of the pension time required for full pension (6% per year); the above reduction is imposed on the pensionable salary before adding the family allowance to it.
The above reduction, which may amount up to 30% on the pension in case that the insured retires 5 years earlier than completion of the insurance time required for full pension, is permanent, thus this option should generally be avoided.
For those who establish the right to pension after 1/1/2011 and wish to retire under the provisions for reduced pension, the percentage of the reduction is now 0,5% for each month previous to the year of retirement with full pension, which means 6% per year.
TIME OF ADMISSION TO INSURANCE
As time of admission to insurance is considered the time when someone was first insured at any Main Insurance Fund/Institute, not the time when he/she was insured at ΤΑΠ-ΟΤΕ. For this reason, even one day of insurance before 1983 is enough for ΤΑΠ-ΟΤΕ to classify said insured under the first insurance category.
Pensionable salary taken as base of calculation of the pension includes the basic wages as well as the benefits/allowances that are provided as permanent increments of the basic salary, if the relevant insurance contributions to the pension sector are paid for them. Family allowances, bonuses, end-of-year allowances, travel allowances, payments for overtime work etc are not included in the pensionable income (especially for family allowances, if the insured receives such an allowance, its sum is added afterward). Reductions on allowances such as the fixed allowance, result in corresponding reductions on the pension.
INDICATIVE EXAMPLES ON THE AMOUNT OF THE PENSION
The year of admission to insurance is key to the calculation of the pension by the Insurance Funds of the various Public Utility Corporations (in Greek characters ΔΕΚΟ) as is the amount of the pensionable income to the final sum.
The total wages minus the reductions imposed on the salary are taken as base of calculation of the pensionable income.
EXAMPLE A: A 59-year-old insured before 1983 completes 35 years of insurance with repayment of military service time and is entitled to retirement with no required pension age in 2012. Which will the sum of his pension be if his pensionable wages are 2.200,00 euro?
ANSWER: The person in the example above is classified under the insured-before-1982 category and may retire with full pension. His pensionable salary will amount to: A) 76% of his pensionable wages for 28 years of insurance he completed until 2007 (for 15 years: 50% plus 2% x 13=26%, total: 76%), i.e.: his pensionable salary will amount to 2.200,00 euro: 2.200,00 euro x 76%=1.672,00 euro, and B) he will receive an average of 2.100,00 euro x 2/35 x 75%=90,00 euro. Total of pensionable salary (A+B): 1.762,00 euro
If the above insured retires in 2013:
with the same pensionable salary: A) 2.200,00 euro x 28/35 x 80%=1.408,00 euro and B) 2.100,00 euro x 7/35 x 74%=311,00 euro.
Total of pensionable salary: 1.719,00 euro.
This 43,00 euro difference will be 22,00 euro in the final net amount of the pension if he retires in 2012 or in 2013 according to the provisions in force for the years up to 2012, after deduction of the reductions, health fund contributions and taxes.
An insured before 1983 who retires in 2012 with pensionable salary of 2.200,00 euro, who has completed 30 years in total before the age of 55, with 25 years of insurance completed until 2007, will receive: 70% of the pensionable salary (1.540,00 euro) for part A of the pension and for part B with a 5-year-average-wage of 2.120,00 euro x 5/35 x 75%=227,00 euro.
Total of pensionable salary: 1.540,00 euro x 227,00 euro=1.767,00 euro.
If the same person retires in 2013 with the same pensionable salary, the calculation method will be different, with the following results:
A) 2.200,00 euro x 25/35 x 80%=1.257,00 euro and
B) 5-year-average 1.120,00 euro x 6/35 x 74%=260,00 euro.
Total of pensionable salary: 1.526,00 euro.
This difference of 241,00 euro in the pensionable salary, in the end and after deduction of the reductions according to the respective scales, taxes and health fund deductions will be only 34,00 euro compared to 2012 or 2013.
A person insured within the 1983-1992 period with 25 years of insurance from 1987:
A: with 20 years of insurance completed until 2007 and with a salary of 1.600,00 euro x 20/35 x 80%=731,00 euro.
B: with 5 years after 2007 with a salary of 1.500,00 euro x 5/35 x 75%=161,00 euro.
Total of pensionable salary: 892,00 euro.
If we add a sum of 200,00 euro approximately for additional pension, then, with 25 years of insurance this person will have pensionable salary (and not net salary) from 1.000,00 euro to 1.100,00 euro.
Subsequently we calculate the reductions according to the amount of the pensionable salary, pension-age reductions etc.
For each year of insurance completed until 2007 the difference gets smaller and you should take under consideration that the bigger the amount of the pension the bigger the reductions, thus you should be very careful when you finally decide when you will retire and what amount of pension you will be entitled to.
As soon as you establish your right to pension, you should take everything into consideration, calculate your pension, your current wages, think about what may come later and then decide what's best for you.
We simply inform you on the provisions in force and under no circumstances do we suggest what you should do. However, you should always keep in mind that the difference between your current salary and the pension you shall receive is significant, especially for those who retire with reduced pension.