Everyone knows that Greece is still recovering from the financial crisis that shook it in 2009. The country is taking all possible measures to maintain the most comfortable standard of living for the population and a painless transition to a new economic era.
But, of course, the burden of debt puts enormous pressure on the state, and the “subsidence” of economic policy in the social sector is especially noticeable. For example, one of the most significant payments – pension benefits – has been severely cut. And it is not known when to expect a reverse increase: after all, today pensions in Greece are strictly fixed, which is due to the requirements of the IMF. Is a dignified old age possible in modern Hellas?
In Greece, pensions and benefits are paid from Three types of social funds :
- To ensure civil servants.
- Other employees Greek citizens.
- For payments labor migrants.
In addition to the state ones, there are a number of professional and private savings insurance funds, into which you can make contributions at will; this allows you to receive additional payments to the state pension after reaching retirement age.
From the same funds the following will be produced:
- payment of unemployment benefits;
- coverage of free medical care for pensioners and purchase of medicines
The amount of payments depends on a number of factors:
- Legislatively adopted living wage.
- The amount of contributions to the state and accumulative pension fund.
Employees pay 6.7% of their gross salary in Greece, with an additional 13.4% paid by the employer for each employee.
Business representatives and self-employed people pay the full tax of 20.1%.
- Labor and (insurance pension) length of service.
- Social status.
- Areas of activity (the retirement procedure for civil servants differs from the requirements for other categories of employees)
Social funds in Greece have the powers of banks, whose management has the right to invest accumulated funds in their own projects. This situation causes concern among many Greeks. The risk of losing everything is too great. The authorities are reassuring investors with state guarantees of pension payments, but how reliably the savings are protected is not entirely clear.
What do foundations do?
The main conditions provided by the funds include:
- payment of pensions, the amount of which corresponds to contributions;
- providing the population of the country with high-quality medicines, which they can receive free of charge;
- providing the population of the country with high-quality free medical care;
- providing citizens of the country with the opportunity to take a free flight once every 12 months.
The choice of fund largely depends on where the pensioner lives. Greek insurance funds pay not only labor pensions. Benefits are also paid to disabled citizens and families left without a breadwinner.
On the problems of the pension regime in Greece
Effective social insurance systems in many European countries are now bursting at all seams.
Until about 2005, Greece was considered the country where the wealthiest retirees live. They received 96% of their previous salaries and essentially maintained their previous lifestyle in retirement without working.
The average salary in Greece was 2,000 euros, and the retirement age began at 57 years. Having gone on vacation, pensioners had the opportunity to live without denying themselves anything: traveling around the world, purchasing real estate in other countries.
In the context of the economic crisis and events taking place in Greece itself, it turned out that the lion's share of GDP is spent on paying pension benefits. Taking into account the fact that the population is aging, it has become obvious that the government, along with other measures to overcome the crisis, needs to raise the retirement age.
The main reasons that prompted the state to adopt a law changing the retirement age.
Reasons for the adoption of the law about changing the retirement age
- A sharp drop in natural population growth.
- Reduction in the number of working-age population.
- The outflow of the local population to other countries in search of high earnings.
- Increasing number of people of retirement age.
- High unemployment rate.
- Reducing wages.
- Reducing employer contributions to funds.
- Corruption is the plunder of insurance funds by officials.
Economists considered that, at a minimum, raising the retirement age to 65 years, and in the future to 67, would move the process of gradual collapse of the system as a whole off the ground. This will allow Greece to save 1 billion euros annually.
The issue of paying real pensioners has worsened in the country to the point that the government was forced to reduce the amount of pensions by more than half. Pension costs today average 500 euros.
Pension reform in Greece is a protracted crisis and a debt hole that has been going on for 10 years. The state realized that pension payments would deprive the country of getting out of a difficult situation, so the government issued an order to reduce GDP for pensioners by 1 percent and refund taxes.
Ultimately, the size of the Greek pension was reduced to 50% of previous benefits. Such changes are of great concern to pensioners. But this article will help you get acquainted with pension problems in Greece and the minimum and average pension in 2019 in more detail.
There are three main insurance funds in the country:
- ICA Fund (one of the largest insurance funds).
- Regional State Administration Fund (insurance applies not only to local residents, but also to citizens of other states).
- Fund for civil servants.
All these funds are equally responsible for saving funds received from the citizens of the country. The amount of contributions depends entirely on the salaries of employees and the income of organizations. The entire pension system is built on mandatory cash payments, both from the working staff and the employer. In the future, the pension amount is calculated from all previously made contributions.
Funds are required to:
- Provide free medical care.
- Once a year, pay in full for travel and flights for vacation.
- Provide needy pensioners with free medicines.
- Payments of benefits to disabled people and families who have lost their breadwinner.
- Monthly payments to Greeks who have retired.
Retirement age in Greece
There are no significant differences from other countries regarding the retirement of citizens. You need to develop work experience and make deductions every month of a certain percentage of your salary to the insurance fund.
At the moment, people who have reached 65 years of age will be able to become pensioners, but by 2021 the age will be increased to 67. As for the length of service, it is now 33 years, but over time the government plans to increase it to 40.
What is the pension in Greece in 2019?
Pension payments consist of three components:
- The amount of funds contributed for the entire work activity.
- Work experience.
- Start of insurance.
The table provides a detailed look at pension indicators in Greece for 2019.
Problems of the Greek pension system
The crisis in Greece took its toll largely on pensioners. A huge part of the money goes to pension payments to citizens of the country. Economists, according to their calculations, came to the conclusion that by increasing the retirement age to 65 years, and subsequently to 67, the country will gain about 1 billion euros every year.
The main reasons that prompted the country to raise the retirement age:
- Low birth rate in the country.
- A sharp reduction in working people.
- Unemployment.
- Small cash contributions to funds.
- Increase in citizens of retirement age.
- Reducing wages at enterprises.
- The departure of Greeks to other countries to earn money.
- Corruption flourishes.
Conclusion
The country is going through not the best of times. Consideration of the issue of pension indexation has been postponed until January 1, 2021. Due to the current situation, pensioners are left with their own efforts to improve the conditions of their existence and not lose optimism.
Attention! Due to recent changes in legislation, the legal information in this article may be out of date!
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