The measures to support pensioners and the vulnerable: See detailed examples

The measures announced by the Prime Minister for pensioners and the socially vulnerable from the TIF, are analyzed by the Ministry of Labor with examples. In particular, as noted in the relevant announcement, “a large part of the measures announced by Prime Minister Kyriakos Mitsotakis from the TIF platform are to be implemented in the coming months by the Ministry of Labor and Social Affairs and the supervised entities. Of these, the support measures of a total amount of more than 1.3 billion euros that concern the majority of 2.4 million pensioners and vulnerable social groups stand out.”

However, other measures are particularly important, such as e.g. the extension of the maternity allowance in the private sector as well as the abolition of the 1% levy in favor of the former Civil Servants Provident Fund, measures that will be included in the bill for the rationalization of the insurance system that will soon be posted for public consultation. Since a series of questions have been submitted about these measures, the Ministry clarifies the following with examples:

1) Increases of more than 6% in the main pensions

From 1/1/2023, the main pensions are increasing for over 2/3 of pensioners (about 1.6 million) with the total fiscal cost amounting to at least 600 million euros. The increase is expected to exceed 6% and is based on a special rate that is formed by 50% from the change in GDP and by 50% from the change in the Consumer Price Index of 2022. An accurate picture of the final amount of the increases will be available at the beginning of 2023.

The remaining 1/3 of pensioners (around 800,000) who will see either accounting increases due to a personal difference or marginal increases, will mostly benefit from the abolition of the special solidarity contribution for incomes above 12,000 euros (discussed below).

EXAMPLES

Example 1: A pensioner without a personal difference who currently receives 750 euros in his pocket per month, from 1/1/2023 and with an increase of 6%, his pension increases by 45 euros per month reaching 795 euros. Annual benefit 540 euros.
-In the event that the increase rises to 6.5%, his pension increases by 49 euros per month, reaching 799 euros. Annual benefit 588 euros.
-If the increase is 7.5%, his pension increases by 56 euros per month, reaching 806 euros. Annual benefit 672 euros.

Example 2: A pensioner without a personal difference who currently receives 1000 euros in his pocket per month, from 1/1/2023 and with an increase of 6%, his pension increases by 60 euros per month reaching 1060 euros (before tax). Annual benefit 720 euros.
-If the increase rises to 6.5%, his pension increases by 65 euros per month, reaching 1065 euros (before tax). Annual benefit 780 euros.

Example 3: Be a pensioner who, in 2021, has a small personal difference of 21 euros and receives 1000 euros in his pocket monthly. With a 6% pension increase, it covers his personal difference and will have a monthly increase of 39 euros (annual increase of 468 euros).
If the pension increase reaches 7.5%, then he will have a monthly increase of 54 euros (annual increase of 648 euros).

Example 4: A pensioner who in 2021 has a significant personal difference of 150 euros and receives in his pocket 1,500 euros per month. With a 6% pension increase, he will not see any increase in his net amount, but the personal difference will now drop to €60 per month.
-With an increase of 6.5%, the personal difference is reduced to 53 euros.
-With an increase of 7.5% then the personal difference decreases even more to 38 euros per month.
However, this pensioner may see an increase from the abolition of the special solidarity contribution.

2) Abolition of special solidarity levy

It is about the abolition of the so-called “solidarity tax contribution” for pensioners with incomes above 12,000 euros. It must be emphasized that these incomes do not only concern pensions but the total of declared incomes per pensioner. In this context, the final beneficiaries exceed 1 million with a total budget cost of 274 million euros.
Example 1: A pensioner with a total declared income of 15,000 euros, 8,000 from pensions and 7,000 from rents, will have a total annual benefit of 66 euros due to the abolition of the special solidarity contribution.
Example 2: A pensioner with a total declared income of €22,000 from two sources, €17,000 from pensions and €5,000 from rent, will have a total annual benefit of €276
Example 3: A pensioner with a total declared income of 24,000 euros from two sources, 14,000 from pensions and 10,000 from rents, will have an annual benefit of 376 euros.
Example 4: A pensioner with a total declared income of 30,000 euros, 16,000 euros in pensions and 14,000 from rents, with the abolition of the extraordinary solidarity contribution is going to have an annual benefit of 676 euros.

Compound examples

Example 1: A pensioner with net earnings of 1,157 euros, from 1/1/2023 and with an increase rate of 6%, will receive 1,221 euros, that is, he will have a monthly increase of 64 euros, and on an annual basis this increase reaches 771 euros. Of the total benefit, 698 euros are due to the increase in pensions and 73 euros to the abolition of the solidarity levy.
-If the final increase reaches 7.5%, then the annual benefit reaches 946 euros, divided into 873 euros from the increase in pensions and 73 euros from the abolition of the solidarity levy.

Example 2: A pensioner who has an annual gross pension amount of 2,500 euros, of which 200 euros is a personal difference. In 2022, after deducting insurance contributions, solidarity contributions and taxes, he received 1,822 euros. In 2023 after the 6% increase and the abolition of the solidarity levy, his personal difference is significantly reduced to €62 and he himself will now receive net in hand, €1,864, as a result of the abolition of the solidarity levy – an annual benefit of €501.
-If the increase is of the order of 7.5%, then his personal difference is further reduced to 27.50 euros, while the net amount he receives will be 1,864 euros.

3) One-time aid of 250 euros to vulnerable groups

In December, a one-off aid will once again be given to our vulnerable fellow citizens. The differences compared to the previous payment are that the amount increases to 250 euros (from 200 previously), while the number of benefiting pensioners is significantly expanded as the aid will be received by those pensioners who have a monthly income of 800 euros instead of the 600 euros that was in force, while the criteria of family income and property are correspondingly expanded.
Specifically, beneficiaries are:
– 1 million pensioners (up from 634,000 last year), with an annual individual taxable income of up to 9,600 euros (against 7,200), an annual family income of up to 16,800 euros (against 14,400) and real estate up to 300,000 euros (against 200,000 euros),
– 35,000 uninsured senior citizens of OPECA,
– 225,000 beneficiaries of the Minimum Guaranteed Income who will receive a double installment in December,
– 172,000 disability allowance beneficiaries,
– 800,000 OPECA child benefit beneficiaries will receive a 50% increased benefit,
– 100,000 long-term unemployed from 12 to 24 months – based on the model implemented during the pandemic – who are not beneficiaries of the Minimum Guaranteed Income with an annual individual taxable income of up to 9,600 euros and an annual family taxable income of up to 16,800 euros.
In total, the beneficiaries of the measure are 2.3 million of our fellow citizens and the total cost amounts to 496 million euros, of which 250 million euros concern pensioners.

Example 1: A pensioner with an annual individual taxable income of 8,000 euros did not meet the criteria for receiving the extraordinary aid of 250 euros last year (the limit was 7,200 euros). Now, with the expansion of the maximum declared income to 9,600 euros (from 7,200), he too will be able to receive the emergency aid.

Example 2: A pensioner with an annual taxable income of EUR 7,000 and real estate of EUR 250,000 did not qualify for the EUR 250 aid during the previous payment (real estate limit was EUR 200,000). Now, with the increase in the amount of real estate from 200,000 to 300,000 euros, he too can receive the extraordinary aid.

4) Payment of the 4th annual increase resulting from the recalculation of pensions based on Law 4670/2020

Last year, more than 150,000 old pensioners (those who applied for a pension before May 2016) with more than 30 years of insurance saw increases in their earnings after their pensions were recalculated based on the improved replacement rates provided for in the law. 4670/2020. Specifically, they received 3 of the 5 annual increases provided for in the law. Thus, in 2023 they are expected to receive the 4th annual increase.
Example 1: A retiree who submitted a retirement request BEFORE May 2016 and has completed OVER 30 years of insurance received last year 3/5 of the increases provided for by Law 4670/2020 and the corresponding retroactive ones. In 2023 he will normally receive the 4th annual increase.
Example 2: A retiree who submitted a retirement request BEFORE May 2016 and has NOT completed at least 30 years of insurance is NOT entitled to the said increase as he is not subject to the provision of Law 4670/2016 regarding the improved replacement rates.
Example 3: A pensioner who submitted a pension request AFTER May 2016 and has completed OVER 30 years of insurance is NOT entitled to this increase as it ONLY concerns old pensioners. New pensioners (applying after May 2016) have already received all of their due increases.

5) Extension of maternity allowance in the private sector (to mother or father alternatively)

The maternity allowance is extended to the private sector from 2023 for three months. From six months to nine months. The measure can be applied alternatively to the father as well and is primarily aimed at supporting the family and effectively equalizing the public and private sectors. The allowance is paid by the Public Employment Service and will have an additional cost of approximately 60 million euros.

Example: A mother currently receives for special maternity protection the basic minimum wage for 6 months, i.e. 713×6 = 4278 euros (gross).
With the extension of the allowance by three months, he will receive 713 x 9= 6417 euros gross.
In both cases she receives both a proportion of Christmas and Easter Gifts and a proportion of leave allowance, depending on the time period her allowance falls on.

6) Abolition of the 1% levy in favor of the former Public Employees Welfare Fund (TPDY)

This measure – in combination with the abolition of the Solidarity Contribution for civil servants as well – leads to the strengthening of their incomes. In practice, a head of the State Department benefits annually by 364 euros. An ordinary employee, newly hired, by 109 euros. A director by 591 euros. A general manager by 1,125 euros.

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