In 2023, after more than 12 years, we will see a significant increase in basic pensions. We are separated from the last implementation of increases not only by time, but also by a completely new pension system. Thus, the implementation of boosts becomes a challenge for e-EFKA services and electronic systems.

Law 4387/2016, as formulated and currently in force, requires a set of provisions to describe the mechanism in question.

Starting with the national pension, it is adjusted by a combination of Articles 7 and 14 according to the same mechanism as for the general pension, i.e. average GDP growth and consumer price index for the previous year. Assuming that this is 7% in 2022 (say 8% average annual inflation and 6% average real GDP growth), then the national pension will rise to around 411 euros from 1/1/2023. This will be the amount that the pensioner will already receive, but each new pension will be issued for this amount. This process is continuous: if we assume that in 2023 the average GDP and inflation will be 5%, then from 2024 the national pension will be about 432 euros, and so on.

The increase in national pensions will entail a number of figures that are “tied” to it: the upper limit of basic pensions, the minimum limits of death pensions, and an upward adjustment in the old-age benefit for the uninsured.

Now let’s move on to the insurance part of the pension, for which there are disputes about how to adjust it, while many insured people confuse today’s pension with the future one (pension applications after 01/01/2023).

The law provides for two different mechanisms for adjusting to inflationary pressures:

The first concerns pensions already issued and is described in Article 14 of Law 4387/2016 and represents, as mentioned earlier, the average rate of change in annual GDP and the rate of change in the annual consumer price index for the previous year.

However, there is a second mechanism regarding pensions issued at any given time, and it is described in Article 8 of Law 4387/2016. Each new pensioner will receive a compensatory pension based on pensionable earnings. Pensionable earnings are adjusted to the previous year of retirement based on the change in the average general consumer price index.

In 2023, more than 1.65 million pensioners will receive a pension increase.

What does it mean; This means that all pensions (current and future) are increased, but by a different mechanism. Existing pensions will receive an increase themselves, and future ones will be increased, because the pension earnings, on the basis of which we will calculate them, will increase with inflation in 2023.

It is advisable to have a separate mechanism for adjusting existing and future pensions. And this is because with the issuance of a pension, the image of the moment must be captured and the insured worker now becomes a pensioner. From the moment he becomes a pensioner, his pension must match the size of the economy. On the contrary, earnings change over time, and at the time of issuance of the pension, the contributions paid must be expressed in today’s prices, and the pension must be issued taking into account the effect of inflation. From that moment on, the amount of the pension will be adjusted.

Here is an example: An insured person applies for a pension in 2022. He has an inflated (i.e. adjusted for inflation over time) pension earnings of 1,500 euros and 39 years of service. This insured person will currently have a national pension of 384 euros and a compensatory pension of 712 euros, totaling 1096 euros. This pension in 2023 due to the increase mechanism – even if it is 7% – will reach 1173 euros (411 euros + 762 euros).

Suppose the insured stays at work for another year and retires in 2023, having by this time 40 years of experience. His inflated pension earnings (with inflation of at least 8%) are no longer 1,500, but 1,620 euros, taking into account inflation in 2022. Thus, his pension will be 411 euros (national) and 812 euros (compensatory), totaling 1223 euros. . With an extra year of work, he will receive an increased pension of €127 per month in 2023 as a result of both inflation (€89) and an increase in the replacement rate (because he worked one more year, €38). We remind you that if he had retired a year earlier, that is, in 2022, 2023, then after his retirement it would be 1,173 euros.

Let’s take a second example: we have 2 insured people (A and B) who had the same pension earnings in 2022, even 1500 euros. A has 40 years of experience and will retire in 2022. He will receive a national pension of 384 euros and a compensatory pension of 750.15 euros, totaling 1,134.15 euros. In 2023, with 8% inflation and 6% growth, he will receive a 7% increase, i.e. will reach 1213.5. Even if B comes out in 2023, also with 40 years. The pension earnings, on the basis of which his pension will be calculated, now amount to 1,620 euros. Thus, his pension will be 411 euros, and the compensatory allowance – 812.43 euros, a total of 1223.43 euros. Well, B has a slightly higher pension in 2023 than A did in the same year.

Thus, whether we are comparing the same person or two different people, pensions issued in 2023 will be better than those issued in 2022 and received an increase, which here for the purposes of analysis we estimate at 7%.

In 2023, despite all the hardships that the Greek society and economy has faced (a two-year pandemic, an energy crisis), more than 1.65 million pensioners will see their pensions increase thanks to the pension adjustment mechanism described above. In combination with other measures (the abolition of the special solidarity levy, the low-pension Christmas allowance, the payment of the 4th contribution for pension insurance over 30 years old), the number of pensioners who will have at least one increase in income is close to 2.5. million (almost 95% of the total). It is also an answer to those who doubt the numbers and facts.

* Ms. Paulina Caraciotou is the General Secretary of Social Insurance.