Pensions: When the payment for retroactive payments to beneficiaries with more than 30 years of insurance

Paving the way for the implementation of increased replacement rates for main pensions pensions, for those who left with more than 30 years of insurance and are entitled to retroactive payments. As announced by the Ministry of Labour, the Deputy Minister of Social Affairs, Panos Tsakloglou is to sign the relevant ministerial decision.

The new ministerial decision will specify how the increases and the retroactive them in the old pensions, i.e. all those who have left before May 2016. These are about 150,000 old pensioners, who have retired with more than 30 years of insurance and have been waiting for increases in the net amount of their pension from the new increased replacement rates of the Vroutsis law for a year. They are also waiting for at least 20 months of retroactive payments, which they will receive in a lump sum, as announced by the Ministry of Labour.

The reform of replacement rates was passed in February 2020, but is still on paper. It should be noted that the increases resulting from the new rates go back to October 2019, as they face a relevant decision of the CoE which was published at that time. The provisions of the law have not yet been implemented in practice - a year later - with the result that the 150,000 old (pre-May 2016) and 50,000 new (post-May 2016) pensioners who are entitled to an increase in the net amount of their pension due to the new rates have to wait a year for the increases and retroactive their.

The Minister of Labour and Social Affairs, Kostis Hatzidakis recently stated that priority is given to the advance payment of the editorial to those with pending applications up to 5 years old. According to the estimates of EFKA, the advances are expected to be granted before Easter.

Consequently, the increases and retroactive of the new replacement rates should be expected after Easter and towards the summer. It is estimated that the first to be paid will be the new retirees - i.e. those who retired after May 2016 - and then the old pensioners (those before May 2016) for whom the issue is considered to be more complex.

In any case, the new ministerial decision to be signed concerns only the old pensioners, i.e. those who had already become pensioners before the Katrougalos law. These are about 150.000 old pensioners (they were already pensioners in May 2016) who are entitled to pocket increases in 5 annual instalments starting from 2020 until 2024. It is:

• 50.000 old retirees with a small positive personal difference averaging around 30 euros. With the new replacement rates, they make up the personal difference and gain an average increase of 30 euros in 5 annual instalments until 2024.
• 100.000 old retirees who received an increase from 1/1/2019 (negative personal difference) with the Katrougalos law. They are entitled to a new average increase of 40-50 euros in five annual instalments until 2024.

In particular it concerns main pensions public and private sector (except the former OGA), which have either already been recalculated or are pending recalculation. It is recalled that the calculation based on the increased replacement rates for new pensioners - i.e. those who retired after the implementation of the Katrougalos law - has already been provided for in a circular of the Ministry of Labour issued at the end of 2020.

The indexation from 1 October of all the main salaries and pensions pensions granted under provisions prior to the Katrougalos Act, is based on the data on which the first recalculation was carried out (for the period from 13.05.2016 to 30.09.2019).

The improved replacement rates are applied immediately without repeating the first recalculation and adjustment.

In order to determine the pension payable from 1 October 2019, a comparison is made :

• of the amount of the national pension, contributory pension and personal difference paid on 30 September 2019 with
• the sum of the national pension, the contributory pension and the personal difference resulting from the increased replacement rates.

The comparison of amounts shall be made between net amounts before tax.

If the net pre-tax amount received by the Retired before 30 September 2019 is still higher than the amount resulting from the increased replacement rates, then the higher amount will continue to be paid. The difference between them shall continue to be paid at beneficiary as a personal dispute, and following the relevant provisions of the law. In other words, if the new pension is less than the old one, then the old one is paid and the pensioner will have no change.

In the event that the increased replacement rates result in an increased amount to the beneficiary, compared to what he/she received before 30 September 2019, then the amount of the contributory pension is increased by one fifth of any additional difference that arises, for the period from 1 October 2019 to 31 December 2020 and gradually in equal amounts per year until 31 December 2024.

As the increase is expected to be given for the first time in summer 2021, pensioners will directly receive 2/5 of the increase they are entitled to (1/5 in 2020 and 1/5 in 2021).

For example:

if the Retired retired in 2013 (or any other date before May 2016), with €1,500 in pensionable pay (average salary from 2002 to 2013) and 39 years of insurance, is entitled to a total increase of €100. He is entitled to receive it in 5 annual instalments until 2024. For the last 3 months of 2019 and for the whole of 2020, he is entitled to 1/5, i.e. a EUR 20 increase. For 2021 he is entitled to another EUR 20 increase.

According to the plan, he will see a 40 euro increase from the summer and will also be entitled to at least 20 months of retroactive payments, i.e. 500 euro.

If he Retired had a pensionable earnings of €1,000 and 35 years of insurance is entitled to an increase of €35. She is entitled to receive it in 5 annual instalments until 2024. For the last 3 months of 2019 and for the whole of 2020, he is entitled to 1/5, i.e. an increase of €7. For 2021 he is entitled to another EUR 7 increase. According to the plan he will see a 14 euro increase from the summer and will receive at least 20 months of retroactive payments, i.e. 175 euro.

As stated the Ministry of Labour, any retroactive amounts that will accrue to pensioners for the period from October 2019 until the application of the indexation, these will be paid to them in one lump sum.