In our country, in order to receive a pension from the state, there is a general rule that says that you must either work for 40 years to retire at 62, or work for at least 15 years and retire at 67. Obviously, we are talking about the declared work, which, depending on the salary and the declared marks of each of us, forms his income over time, when he stops working. But how can we increase our future income beyond the projected pension that we will receive from the state? Are there ways, and if so, which ones? Are they safe? Are they under supervision? How they work;

In our country, as in other EU countries (France, Holland, Denmark, Sweden, etc.), a three-stage pension system has been adopted. It is a system with proven results in relation to the replacement rate of pensioners in their incomes. This particular system, according to the typology of the Organization for Economic Co-operation and Development (OECD) and the World Bank, is the dominant pension system worldwide, based on public social security (mandatory), occupational insurance (optional) and social security (also optional).

What are the three pillars and how do they work?

Hypothetically speaking, if an employee combines all three components of insurance, he will be able to provide the highest pension replacement percentage in his salary. In other words, he will be able to have the same income as when working (100% replacement). According to last year’s IOBE study by the Hellenic Association of Professional Funds of Greece (EL.ETEA), in the past in our country, the first tier of insurance, that is, state social insurance, had a pension replacement rate of 95.7%. What does it mean? That only from the first and compulsory insurance pillar, people can receive the same pension as the salary they received when they worked. This model has proved unsustainable over time and for various reasons, with the result that today, according to the latest data, this percentage has decreased to 49.9%. A contraction that automatically gave rise to the remaining two pillars.

It is for this reason that in our country in recent years, Professional funds and pension and investment programs of insurance companies (Private insurance) have been developing and increasing their presence and dynamics, selectively supplementing significantly the pension needs of citizens.

→ 1st pillar
State social security

All registered workers collect stamps and pay mandatory insurance premiums through their employer (or as self-employed) so that the state provides them with a guaranteed income when they work out the required years. This allowance includes basic and additional pensions, lump-sum payments, as well as all kinds of benefits and benefits of a social nature. Pensions provided under the first pillar are usually funded through a pay-as-you-go system, where employee and business contributions cover current pensions.

→ 2nd pillar
Professional insurance

This pillar includes professional insurance funds (TEA), which, through a system of capitalization of contributions, i.e. individual accounts for each participating member, provide a ONE-TIME payment (usually) at maturity. Participation in specific funds is optional, contributions are made by the employee with or without the participation of the employer, and one of the main differences from the first level is that through appropriate mechanisms there is access to financial markets with the possibility of indirect investment by the beneficiary. It is worth noting that, as an exception, there are also four compulsory insurance TPEs that relate to employees of insurance companies (CHAS EAPAE), employees of pharmaceutical enterprises (ChEA YFE), workers in the food trade (ChEP ET) and petroleum products companies (ETEA PEP), who, of course, due to their obligations, they collect a larger number of members compared to other foundations. For example, non-mandatory TEAs in our country have been established by Eurobank, Interamerican, Athens International Airport, Ministry of Finance, Athens Stock Exchange, Eurolife FFH and ELTA (in total, as of 2022, there are 23 non-mandatory TEAs).

→ 3rd pillar
private insurance

Private insurance, like professional funds, is optional and is in addition to public social insurance. It has a capitalization character, is provided through insurance companies and insurance companies, and has an investment or savings purpose through programs with a fixed (guaranteed) or variable interest rate (unit linked). In our country, insurance companies such as Ethniki Asfalistica, NN Hellas, Eurolife FFH, Generali, Interamerican, Allianz, Groupama, European Credit and CNP Zois have such programs, with the aim of increasing the pension replacement rate or serving some other long-term financial goal.