15 drastic changes in Social insurance law

19 December 2016
762 Views

The new Social insurance system, legislated by former Labour Minister George Katrougalos will change drastically as of January 1, 2017 for thousands of employees and pensioners. Some of the changes that will take affect from the new year include:

1. Freelance professionals and scientists will be called in to contribute 20% on their net income for main pensions and an additional 6.95% for medical coverage.

2. The base year for determining social security contributions for 2017 will decided in the next days, with sources saying that 2017 will be taken as a transitional period and the net income of 2015 to be taken as the base year.

3. The financial obligations for professionals earning over 19,000 euros per annum will be much higher under the new system.

4. The plan is for contributions calculated on the net income will be paid on a monthly basis, with the ability to settle the amount by the end of the following month.

5. Professionals and small businesspeople with annual net income below the 12,000-euro threshold will benefit under the new system.

6. Self-employed scientists like architects or lawyers, the hew system provides for a 3-year transitional period of discounts strain from 5% (incomes from 57,000-58,000 euros) up to 50% (7,033-13,000 euros). The discount scale is lowered by 1% for each 1,000 euros of income.

7. Individuals with receipt blocks offering freelance services while working as employees at companies will be called up to pay double contributions for social security and healthcare.

8. Bank employes and Public Utilities workers will be two of the very few groups who will see their contributions go down gradually under the Katrougalos law.

9. Farmers insured under OGA will have to pay the new contributions of the first 6-month period of 2016 by December 31, which will be 8.5% top 15% higher compared to 2015.

10. From the start of 2017 the 20% contribution will also include public servants, as the state will have to pay the special social security tax (EFKA).

11. The level of the new pensions will be calculated and determined based on the new Katrougalos law, and are estimate to be 10%-30% lower compared to the previous system. This means they will range from 400 euros to 1,200 euros.

12. The social solidarity benefit (EKAS) will be slashed on aggregate by 430 million euros, which translates into about 50% cuts in the benefit.

13. The acquisition cost of notional years will increase 3-fold for public servants.

14. Dividends will be cut by 500,000 euros in 2017.

15. The government’ is investing a lot on the seamless and smooth introduction and operation of the new Common Social Security Fund (EFKA), which provides for the inclusion of all social security funds under one super-fund including the transfer of assets worth 16 billion euros.

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