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3 great twists on Katrougalos Law, towards "more proportionate pension ', Who lost who earn

In the plan of the Ministry. Work is to restore proportionality to pensions with improvements in replacement rates, primarily for those over 37 or 40 years of work……

These are the 3 great twists the law Katrougalos, the newspaper:

  1. Changing rates of contributory pension amounts increase after 37-40 years of work.
  2. Examined the three Funds separation within EFKA for employees, professionals and farmers.
  3. Reset headings option of the insured for a shorter or longer levy proportional pension.

In view of the forthcoming decision, the latest reports speak of issues "non-reciprocity" in the issue of replacement rates and unconstitutional provisions in the consolidation of funds and assessment of contributions.

The decision is expected to pave the way for the separation within EFKA Funds for employees, professionals and farmers, with a possible resetting of insurance classes for professionals and farmers and choosing low or higher premium from insured persons.

In the plan the Ministry of Labor and Social Affairs, regardless of the decision of the judges, It is to review the basic rules of law 4387/2016 and, mainly, restoring proportionality to pensions, with improvements in replacement rates primarily for those over 37 or 40 years working in complementary and 'intermediate' levels, that the final amount of pension to reflect better replenishment salary.

Already the subject of changes in the law Katrougalos, towards "more proportionate pension ', opened with the relevant statements in recent days, the Deputy Minister of Labor and Social Affairs Notis Mitarachi, showing essentially that is preparing for a new mixture of the calculation coefficients of the reciprocal structure, aiming to be more equitable system mainly by those who pay for many years high contributions.

The pension cuts with the law 4387/2016 arrive and 38% and even "punished" with lower pension who have worked many years.

For example:

- Insured with pay 2.000 euro and 38 years gets Katrougalos pension law 1.092 euro mixed, corresponding to 54,6% their salaries, when the old regime (pre law Katrougalos) She would take her and larger pension amount 1.127 euro mixed, with 35 years and salary 1.600 euro! By Law 4387 It takes less having paid 38 years of contributions and has replacement rate 54,6%. The previous will take having more pay 35 years of contributions and had replacement rate 70,4%.

The replacement rate indicates how close is the writing in relation to the salary. In the example presented above it appears that 35 years insured contributions receive a pension equal to the 70,4% salary, while with the law and with Katrougalos 38 years of contributions receive a pension equal to the 54,6% salary.

The difference is huge and means, as many years adds an insured in his career, instead rewarded with a higher replacement rate, He ends up getting less and essentially pays contributions without bounced drafting!

the extremes, not, with replacement rates of Katrougalos law proved and that in a few years of work and low wage replacement rate reaches 92,6%!

Here is a typical example showing the "ends" of the law:

- Insured by 20 years of employment and salary 500 Euro will get to law drafting Katrougalos 463,35 euro, ie will get an amount equal to 92,67% salary. while 700 salary euro (and 20 years) will get 495 syntax euro, i.e. equal to 70,8% salary. While, if the 20 years have salary 1.600 euro, takes 600 syntax euro, i.e. replenishing drops to 37,5%!

The mixture changes

Improving earnings bonus 5% in replacement rates

According to reports, the changes will mainly target the replacement rates applicable after the 37 or 40 years of insurance, where it is examined to increase significantly, perhaps one bonus 5%, instead 2% which gives the force of law after 40 years- that the reciprocal structure coming higher and, together with the national 384 euro, to "give" greater than today replenishment salary, as an incentive for working longer.

For example, with 40 years the rate of contributory pension is 42,8% and 2.000 euro salary contributory pension comes in 816 euro in total 1.200 euro together with the national 384 euro. The replenishment dribbled 60% (1.200/2.000=0,6). An improvement in the contributory pension 2% with 3%, namely 45% instead 42,8%, Located in the projects studied. In this case the contributory pension for a worker who has paid contributions 40 years with salary 2.000 Euro rises to 900 euro and 1.284 euro alongside national. The replenishment, namely, increases in 64,2% instead 60%.

The changes will not become "uncritically", but will precede economic study will capture all scenarios of the new rates to pensions.

A critical issue is whether to increase significantly and for all the years the calculation factors of contributory pension against a reduction of the national pension, that the system and that pensions are amplified more than the contributions to insurance incentives, rather than spending on national pension, or if it will stay the same logic of the law 4387, which in substance has separate insurance to those who pay a lot and those who have no reason to pay a point on, as with 20-25 years with low wages and approach to replenish even the 70%-90%.

Who lost who earn

Who pays retirement

Under the current system, better to leave with a pension who have a few years of insurance (20 as 27) low and average earnings (B.C. 800, 900, 1.100 euro) in space 2002-2019. The syntax will get is either greater than you would get older, or slightly less depending on the year and their remuneration.

In the case of reduced pension (with age as 5 or more years before the full pension threshold) the output is more advantageous, because the reduction is as penalty 30% and imposed only to the amount of the national pension, and not the total amount. So, instead 384 euro falls to national pension 268 euro exit 5 years earlier, while the contributory pension is not affected. In the previous regime, the sentence 30% entered throughout retirement. For example, insured salary 1.250 euro and 27 It takes years now 628 EUR complete and 512 euro reduced. With the old regime would take 601 EUR complete and 421 euro reduced.

Conversely, better to stay -under the condition that their pensions with better rates will rise- those with more than 37 or 40 years, as contributory pension will be significantly improved rates and the new plan would benefit the, reducing losses in connection with pension funds that would get the previous system.

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