Pension Paradigm Shift: Who Will Benefit from EAS Reductions

From the scenarios considered, pensioners may come out winners with net pension increases of up to 60 euros per month with a freeze or reduction of the EAS deduction from the January 2025 pension.

According to information from “ET” of Sunday, what is being considered is that the pensioner receives the increase without taking into account either the whole or a part of the additional burden that the EAS will cause in the event that the scale changes.

For example, a pensioner who receives 1,395 euros does not pay EAS, because it is below 1,400 euros. With the increase he will get in 2025 and is estimated at 2.5%, the pension will rise to 1,430 euros and will automatically lose 30 euros from the EAS and will be left with an increase of only 5 euros.

With the regulation that is being promoted, it is considered either to get the entire increase (35 euros) or to pay half of the EAS to be left with a 17 euro increase.

Confirmation

The changes in the mix of EAS reservations were confirmed by the Minister of Labor and Social Security, Niki Kerameos, who, in response to a question from Sunday’s Free Press last Thursday, said that an intervention is underway, in collaboration with the Ministry of Finance, so that retirees can not lose their increases in cases where their EAS deduction leads to a reduction, rather than an increase, in their pension.

When the increases fall short of the EAS, retirees get even less than they would have without the increase! Here’s how: A pensioner with 1,695 euros gross has a 3% APR and a reserve of 50.85 euros. His pension after the detention amounts to 1,644.15 euros. With the 2.5% increase that he will get in 2025, the pension will rise to 1,737 euros, but the EAS reservation, due to a change in scale, doubles to 6%, and he will get 104 euros with the pension going down to 1,633 euros. In practice the increase will be zero because the EAS has doubled, with the result that the pensioner will have a pension reduction of 11 euros, i.e. from 1,644 euros now to 1,633 euros in 2025 despite the increase. There are two versions in the plan that the Ministry of Labor is working on:

1 The EAS should be frozen and where reductions are caused, pensioners should receive a corrective increase or even half the increase.

2 To change the structure of the EAS and to establish 4 proportional scales, based on which the EAS will be calculated on the difference in the amount of each scale and not on the entire pension as is the case now. Included in this scenario is the abolition of the EAS imposed on mixed supplementary pensions over 300 euros with rates of 3% to 10%.

In the event that four scales are selected, the reservation rates and pension amounts on which they will be imposed are estimated to be 15% for the pension section from 1,400 euros to 1,800 euros, 20% for the pension section from 1,800 euros to 2,200 euros , 25% from €2,200 to €2,800 and possibly 28% from €2,800 and above.

For high pensions, there will be an automatic cut-off in the event that, with the new scales, the resulting reduction is greater than the current one.

The first scenario is the freezing of the EAS when there is a reduction in pensions, which seems to be easier before the radical reform of the EAS is attempted. With the freezing of the deduction, the rates will remain as they are today in the main pensions, i.e. deductions of 3% to 14% of the whole pension from €1,400 and above, except that they will be reduced to zero when it is found that pension increases are being phased out.

In this scenario, for example, a pensioner receiving a main pension of 1,400 euros with the increase he will receive in 2025 will reach 1,435 euros. In this amount, he will have a contribution of 3% from the EAS and a reservation of 43 euros, which means that the increase is distributed and in fact he will have a pension reduction. With the alternative version that the ministry is considering, the pensioner will not have a reduction, but will get the increase that corresponds to him.

This alternative scenario, however, will not be applied to all pensioners, but, as a competent official of the Ministry of Labor reported to “ET.” of Sunday, the EAS freeze will apply in cases where pensioners end up with a smaller pension and zero increase. For this reason, the scenario for freezing the EAS is the cheapest of all, as only the pensioners who will have reductions benefit.

How the measure will not charge not even a single euro the Budget

The scenario that will qualify has to do with the cost of reducing the EAS. The cost, as revealed by the official figures of the EAS where the EAS deductions are directed, can be zero and the State Budget does not have to pay anything, as the money for the reduction of the EAS can come from the interest collected by the EAS . For 2025, interest income of 302 million euros is predicted. Half of this could be allocated to reduce the EAS for all pensioners, without spending a single euro from the State Budget.

Who will benefit doubly

With the second scenario for the reform of the EAS and in the event that 4 scales apply, pensioners with earnings above 1,400 euros are expected to benefit twice in 2025, since, in addition to the increases they will receive in their pensions, with rates of around 2.5 %, they will have an extra increase from the reduction in EAS reservations that will be passed on to everyone. The additional increase from the smaller EAS deductions will reach up to 60 euros per month. Based on the scenarios considered:

• A pensioner who receives a 1,412 euro gross main pension currently has a reservation of 12 euros, while with the new scale the reservation drops to 2 euros and will have a pension increase of 10 euros.
• A pensioner who receives a 1,457 euro gross main pension currently has a reservation of 44 euros, while with the new scale the reservation drops to 9 euros and will have a pension increase of 33 euros.
• A pensioner who receives a 1,736 euro gross main pension currently has a reservation of 104 euros, while with the new scale the reservation drops to 50 euros and will have a pension increase of 51 euros.
• A pensioner who receives a 2,307 euro gross main pension currently has a reservation of 208 euros, while with the new scale the reservation falls to 151 euros and will have a pension increase of 53 euros.
• A pensioner who receives a 3,651 euro gross main pension currently has an EAS reservation of 510 euros, while with the new scale and with a reservation ceiling of 450 euros, he will benefit from a pension increase of 60 euros. If the ceiling is set at 400 euros, the increase he will get will be 110 euros.

THE INCREASE IN THE MAIN PENSIONS WITH A REDUCTION IN THE EAS

PENSIONS FROM 1,412 TO 1,751 EUROS

Pension (mixed)	EAS 2024	Pension before tax	New EAS	New pension before tax	Pension increase due to EAS reduction
1.412	12	1.316	2	1.325	10
1.427	27	1.316	4	1.337	21
1.442	42	1.316	6	1.350	34
1.457	44	1.329	9	1.362	33
1.488	45	1.357	13	1.387	30
1.504	45	1.371	16	1.399	28
1.581	47	1.442	27	1.461	19
1.720	103	1.520	48	1.572	52
1.736	104	1.534	50	1.584	51
1.751	105	1.547	53	1.596	49

PENSIONS FROM 1,766 TO 2,060 EUROS

Pension (mixed)	EAS 2024	Pension before tax	New EAS	New pension before tax	Pension increase due to EAS reduction
1.766	106	1.561	55	1.609	48
1.797	108	1.588	60	1..633	45
1.813	109	1.602	62	1.646	44
1.844	111	1.629	67	1.671	41
1.859	112	1.643	69	1..683	40
1.875	112	1.656	71	1.695	39
1.890	113	1.670	74	1.708	38
1.906	114	1.684	76	1720	36
1.998	120	1.766	90	1.794	28
2.060	144	1.801	102	1.841	40

PENSIONS FROM 2,075 TO 3,651 EUROS

	Pension (mixed)	EAS 2024	Pension before tax	New EAS	New pension before tax
Pension increase due to EAS reduction	2.075	145	1.814	105	1.852
38	2.307	208	1.974	151	2.026
53	2.570	231	2198	207	2.221
22	2.663	266	2.253	231	2.286
33	3.064	368	2.535	331	2.569
34	3.234	420	2.645	374	2.689
44	3.342	435	2.733	401	2.765
32	3.389	441	2.771	412	2.798
27	3.404	443	2.784	416	2.809
25	3.651	511	2.9524	50 (ceiling)	3.011

59

* EAS with a ceiling of 450 euros.

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