RETIRED WORKERS: CHANGES TO THE “PENALTY” AND NEW CONTRIBUTION SYSTEM

Changes in the employment status of retirees introduce a new way of calculating contributions, replacing the fixed deduction from the pension with a proportional contribution based on income from work. The proposed system aims to create greater fairness for those who continue working while maintaining the full payment of their pension.
Until now, a retiree who works, even for one day per month, faces a 30% reduction in their pension. This penalty, known as the “penalty,” was established by the “Vroutsis law” (Law 4670/2020), reducing the previous cut rate from 60% to 30%, regardless of the number of days worked.
With the upcoming changes, the abolition of the flat 30% deduction is being considered, and the introduction of a more proportional contribution system for working retirees, whether employees or self-employed. Specifically, instead of a pension reduction, it is proposed to establish an additional contribution to EFKA (Unified Social Security Fund), which will apply to their income from employment.
Thus, the retiree will continue to receive their full pension, but on their employment income, an additional withholding contribution to EFKA will be imposed, besides the annual tax, expected to range between 10% and 15%. With this change, the financial burden shifts from the pension to the work income, making the system fairer for those who work occasionally or part-time.