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Reduction of Greek pensions is already a fact

28 August 2015 / 12:08:54  GRReporter
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Today Greek pensioners will receive their first reduced pensions due to the application of the provisions in the third Memorandum of financial assistance. The amounts of the main and supplementary pensions to be transferred to their bank accounts will be 3-4% and 6% lower respectively. The changes affect hundreds of thousands of Greeks who receive pensions from the main insurance fund IKA in Greece and the pension fund of public sector employees.

Similar will be the reductions of pensions that the pension funds will pay to workers in private practice and farmers on 1 September.

This is only the first pension cut following the increase in the deductions for health services that was retroactively introduced from 1 July this year.

The indirect 2% reduction of main pensions is due to the increased contributions from 4% to 6% in favour of the national health system. However, because the amount is deducted from the amount of the initial gross pension without calculating the reductions that were introduced after the year 2010, the actual reduction is in the range of 3-4%.

For example, a pensioner insured at IKA who was receiving a gross main pension of 1,000 euro in 2010 was paid a pension of 912 euro in June 2015 as a result of the reductions imposed by the previous memoranda. Today, his initial gross pension of 1,000 euro will be reduced by 2% and will be set at 892 euro.

The reduction of supplementary pensions is 6% and it is calculated on the basis of the final amount that a pensioner receives. At the same time, by decision of the supplementary pension insurance fund, the 6% reduction will apply to each pension separately, not once for each pensioner. Thus if a pensioner receives two supplementary pensions, each of them will be cut by 6%. This does not apply to main pensions, as in this case, which regards pensioners who receive their own pension and that of their spouse, the recipient can choose which of the two be reduced.

As a result of the changes, a pensioner, who was receiving a supplementary pension of 200 euro before the cuts after 2010 and the amount of which decreased to 157.7 euro, will now receive a supplementary gross pension of 148.3 euro.

According to social security experts, from today until Tuesday, when the payment of September pensions will end, 2.6 million Greek pensioners will receive their pensions with an average reduction of 3.5%. In addition, depending on the amount of the main and supplementary pensions, the reduction will be between 8-10 euro for low pensions and between 45-50 euro for medium and higher ones.

In addition, since the recently-voted law introduces the cuts retroactively from the 1st of July, the reductions of pensions will be even higher in October-December, when the amounts for the months of July and August, that will have to be paid in three instalments, will be cut, in addition to the current deductions.

For example, the reduction in a main gross pension of 800 euro will be 15 euro in September and 27 euro in October, November and December. After January 2016, if there are no new reductions, pensions will return to their September level.

Some commentators associate the desire of former Prime Minister Alexis Tsipras to hold early elections as soon as possible as linked specifically to the pension reductions. His insistence on scheduling the elections for the 20th of September, and not the 27th, aims to avoid having to pay the second reduced pension in a row, as it will naturally affect the votes of pensioners. In addition, according to the economic reporters, the Ministry of Finance is preparing to send out notifications for the first property tax instalment after the 20th of September. It is worth noting that the exact date of the elections has not been announced but the 20th of September is still the most discussed option at present.

Tags: SocietyPensionersPension reductionsEarly electionsProperty tax
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