By Chrysostomos Tsoufis

With 28 occupational insurance funds, 50,000 insured persons and about €300 million in management funds in the 21 years that the institution of occupational insurance has been running in our country, you cannot call it successful. That is why in the mini insurance bill promoted by the Ministry of Labour, a key pillar is the development of the institution through a set of initiatives. These concern the simplification of their establishment procedures, the strengthening of supervision and the incentives to ensure a substantial supplementary pension.

The logic governing the operation of an occupational insurance fund, which can be established by an employer or a professional organization, is the same as that of TEKA, the supplementary insurance fund, with the difference that participation in occupational insurance is optional. Here too, the insured gets an individual piggy bank into which his contributions are directed and invested. He will be able to monitor the course of his contributions through an electronic application. Contributions up to 20% (as much as in the main insurance that is) of the employee’s wages or up to the amount of €15,000 are exempt from income taxation, whichever amount is smaller. In order for someone to reach €15,000 in the auxiliary and the main together, he must have a monthly income of €4,000 in the private sector and €5,000 in the State, which is why the conditions are characterized by the leadership of the Ministry of Labor as generous. Someone can put in more money if they want, but they will be taxed.

After reaching a certain age limit or a certain time limit in the fund – determined by the fund statute – he receives a pension or a lump sum or even supplementary benefits to deal with extraordinary events in the life of an insured such as death or illness. The amount of earnings depends on the amount of contributions and the return on investments that will be collected as is reasonable. In order to receive the benefits, the insured must (not cumulatively):

– To be retired
-To have reached the age of 67 regardless of the years of insurance
-To have reached the age of 55 with 20 years of insurance

If any of the last 2 conditions are met, the insured can receive up to 50% of his money.

In contrast to what is currently the case with professional funds where there is no taxation, taxation is now being introduced in the earnings of these funds so that there are no windows for tax avoidance by the owners. The objective of the Ministry of Labor is to give mainly lump sum pensions and that is why the taxation of pensions is 50% of that of lump sums. And of course, the longer you leave the money in the fund, the lower the tax rate. Taxation is NOT retroactive, everything that already exists in these funds remains as is:

Insurance Term One-off Tax Pension Tax

0-5 years 20% 10%

6-15 years 15% 7.5%

16-25 years 10% 5%

>25 years 5% 2.5%

Someone can decide to receive their money early or part of it but they must have completed at least 15 years of insurance while taxation will be increased by 50%

To avoid “unpleasant” surprises, the same operating conditions will apply to group insurance policies as well as to mutual funds.