Trade with Greece
89
professionals, farmers, and practitioners. It
also covers salaried employees, for the part of
their income that is generated from freelance
activities. Contribution rates have been set at
20% for pensions, 6.95% for health insurance,
7% for supplementary pensions, and 4% for
the payment of one-off retirement benefits. The
20% pension contribution and the 6.95%
health insurance contribution are mandatory
for all, while the 7% supplementary pension
contribution and the 4% one-off benefit contri-
bution are only payable by those eligible for
these benefits. Farmers pay lower pension
contributions, which are initially set at 14% and
will gradually be increased to 20%, after a tran-
sitional period of 5 years (in the year 2021).
Reduced pension contribution payments are
also provided for in the case of young practi-
tioners with less than 5 years of work; the rel-
evant rate has been set at 14% of taxable
earnings for the first 2 years of work, and at
17% of taxable earnings for the remaining 3
years. After the 5th year, this category will also
have to pay the full 20%. The minimum base
for calculating the new contributions is equal to
the minimum salary of 586 euros per month,
while the amount applicable to farmers and
young practitioners is equal to 70% of this
amount, i.e. 410 euros per month. Practitioners
with more than 5 years of work are eligible to a
reduction in contributions for the part of their
annual income that exceeds 7,032 euros and
up to 55,000 euros. The maximum base for
calculating contributions has been set at ten
times the minimum salary, i.e. contributions
are paid on monthly earnings of up to 5,860
euros.
5. Brought about changes to primary pen-
sions
. The new system provides for the recal-
ibration of existing pensions, in accordance
with the rules applicable to the pensions that
will be paid to those retiring after May 13,
2016. This recalibration will have to be com-
pleted by September 2017, and is one of the
thorniest issues regarding the new system,
since it will lead to primary pension reductions.
The purpose of the recalibration is to establish
a unified system, so that all pensions are sub-
ject to the same rules regarding years of work
and earnings. In order to protect pensioners
from further pension cuts, the law provides for
the so-called “personal difference” mecha-
nism. According to this provision, a part of the
pension is preserved as a separate benefit, to
be offset against the pension raises granted to
new pensioners from 2019 onwards. The new
review under the third adjustment programme
may possibly lead to the abolition of the per-
sonal difference provision, since its cost is
equivalent to 1% of GDP. For example, follow-
ing the recalibration, an existing pensioner
who receives 1,100 euros per month, will be
receiving an amount that comprises the
National and contributory pensions. The
remainder will represent the personal differ-
ence. Let’s assume that this pensioner’s
national and contributory pensions amount to
384 and 500 euros respectively, which means
that the new pension stands at 884 euros
