The increases are a result of the automatic indexation of wages from 2002 onwards which is taken into account to calculate the compensatory pension.
The salary indexation factors are determined each year based on the change in inflation of the previous year.
In this case, the indexation of remuneration from 2002 to 2023 will be based on the inflation of 2023, which was 3.5%. This means that the 3.5% change will affect all readjustment rates from 2002 onwards. The pensionable earnings for those due to retire this year will be higher compared to the earnings they would have if they retired in 2023 because they will increase by the rate of last year’s inflation.
With higher pensionable earnings, the compensatory pension will be higher, and they will also be rewarded by the top-up rate increase for the extra insurance time they will have in 2024.
The salary increase factors for those who are going to retire this year have been set by the Ministry of Labor based on the inflation of 2023, and as they were set last year, they were increased by 3.5%, so that the salaries of all previous years are brought “up to date”.
For example, last year the coefficient of change of wages for the year 2002 increased with the inflation of 2022 (9.6%) and was 1.44. The change of 9.6% was passed on to the rates of all years.
This year the coefficient in 2002 from 1.44, increased by 3.5% (2023 inflation) to 1.49. In the same way, all pensionable salary adjustment factors for the following years (2003-2023) were increased and thus the average pensionable salary will be obtained on the basis of which the compensatory pension will be calculated.
The salary adjustment mechanism for those retiring in 2024 works as follows:
*2002 wages are adjusted for the 2002 inflation rate, which increased to 1.49.
*2003 wages are adjusted with the 2003 index which increased to 1.44.
*The 2004 salaries are adjusted with the 2004 index, which was set at 1.40 k.o.c.
In practice, an insured person who has a pensionable salary of 1,500 euros until 2023, and intends to retire in 2024, will get a 3.5% salary increase (indexation) and the compensatory pension will be calculated on a pensionable salary of 1,552.5 euros.
The increase in salary is due to inflation and a part of it will also go into the pension.
In the same way, the pensionable earnings of freelancers will be adjusted, with the difference that the increase with the inflation of the years 2002-2023 will be passed on to the contributions they paid for this period so that the average monthly contribution will be converted into pensionable salary to calculate the 2024 compensatory pension.
WON
Insureds who complete from 36 to 40 years of insurance, get an annual increase of 2.55% in the replacement rates and from 39.81% at 36 years they reach 50% for the 40th year. The annual increase in the replacement rate brakes sharply following 40 years and from 2.55% it falls to 0.5%, so it is not advantageous to stay beyond 40 years.
LOST
Insured persons who will receive a reduced pension will have a 30% cut in their national pension. With 20 years of insurance or more, they will receive a national pension of 298.31 euros (instead of 426.17 euros). The loss is calculable as it amounts to 128 euros per month.
How are self-employed contributions converted into salary to calculate pension?
Only the monthly contributions of the main pension sector are used to calculate the compensatory pension of the self-employed. The conversion of the monthly contributions into a pensionable salary is done by dividing the amount of the monthly contribution by 0.20. This is how the salary to which the pension contribution paid by professionals corresponds. For example the current monthly pension contribution of 1her category which is 169 euros, corresponds to a salary of 845 euros (169 euros divided by 0.20 equals 845 euros). To average pensionable earnings from 2002 to 2023, divide the total monthly contributions by the payment months from 2002 to 2023 and divide the resulting average monthly contribution by 0.20 to get the pensionable salary.
Examples with new pension increases in the private sector
1. An insured person who will retire in 2024 with 38 years and a pensionable salary of 2,928 euros, will receive a pension of 1,741, while if he retired in 2023 when he would have been 37 years old, he would receive 1,660 euros. Upon leaving in 2024, he earns 81 euros per month, or 972 euros per year on a permanent basis, on the one hand because the pension will be calculated with an additional year of insurance and on the other hand, because his pensionable salary will increase by 3.5%, so he will have an additional profit in compensatory pension.
- An insured person who will retire in 2024 with 38 years and a pensionable salary of 1,723 euros, will receive a pension of 1,200, while if he retired in 2023 when he would be 37 years old, his pension following today and the 3% increase would be 1,153 euros. With the exit in 2024 he earns 47 euros a month, or 564 euros a year.
- An insured person who will retire in 2024 with 30.6 years and a pensionable salary of 1,273 euros, will receive a pension of 785, while if he retired in 2023, when he would have 29.6 years, his pension today following the 3% increase would be 753 euros. With the exit in 2024 he earns 32 euros a month, or 384 euros a year.
4. An insured freelancer who will retire with 32.8 years of insurance in 2024 and average contributions of 290 euros from 2002 to 2024 will receive a pension of 885 euros. If he left in 2023 with 32 years, the pension he would have today (following the 3% increase) would be 864 euros. His profit for 2024 is 21 euros per month or 252 euros annually.
5. A self-employed person who will retire with 37.6 years of insurance in July 2024 having paid high contributions since 2002 with an average of 497 euros per month, will receive a pension of 1,510 euros. If he left in 2023 with 36.7 years, the pension he would have today (following the 3% increase) would be 1,442 euros. His profit for 2024 is 68 euros per month or 916 euros annually.
The increases in the new pensions of 2024 for employees of the Private sector
| Pensionable salary 2023 (1) | Pensionable salary 2024 (2) | Pension in 2023 with 29.6 years and 3% increase | Pension in 2024 with 30.6 years | Increase for 2024 | Pension in 2023 with 37 years and 3% increase | Pension in 2024 with 38 years | Increase for 2024 | ||
| Monthly | Annually | Monthly | Annually | ||||||
| 2.829 € | 2.928 € | 1.177 € | 1.251 € | 74 € | 888 € | 1.660 € | 1.741 € | 81 € | 972 € |
| 2.565 € | 2.655 € | 1.107 € | 1.174 € | 68 € | 816 € | 1.545 € | 1.618 € | 73 € | 876 € |
| 2.154 € | 2.229 € | 998 € | 1.054 € | 57 € | 684 € | 1.366 € | 1.427 € | 61 € | 732 € |
| 2.070 € | 2.142 € | 976 € | 1.030 € | 54 € | 648 € | 1.329 € | 1.388 € | 59 € | 708 € |
| 1.902 € | 1.969 € | 931 € | 981 € | 50 € | 600 € | 1.256 € | 1.310 € | 54 € | 648 € |
| 1.869 € | 1.934 € | 922 € | 971 € | 49 € | 588 € | 1.242 € | 1.295 € | 53 € | 636 € |
| 1.719 € | 1.779 € | 882 € | 928 € | 45 € | 540 € | 1.176 € | 1.225 € | 49 € | 588 € |
| 1.665 € | 1.723 € | 868 € | 912 € | 44 € | 528 € | 1.153 € | 1.200 € | 47 € | 564 € |
| 1.577 € | 1.632 € | 845 € | 886 € | 41 € | 492 € | 1.114 € | 1.159 € | 45 € | 540 € |
| 1.486 € | 1.538 € | 821 € | 860 € | 39 € | 468 € | 1.075 € | 1.117 € | 42 € | 504 € |
| 1.561 € | 1.616 € | 840 € | 882 € | 41 € | 492 € | 1.107 € | 1.152 € | 45 € | 540 € |
| 1.416 € | 1.466 € | 802 € | 839 € | 37 € | 444 € | 1.044 € | 1.084 € | 40 € | 480 € |
| 1.347 € | 1.394 € | 784 € | 819 € | 35 € | 420 € | 1.014 € | 1.052 € | 38 € | 456 € |
| 1.290 € | 1.335 € | 769 € | 802 € | 34 € | 408 € | 989 € | 1.026 € | 37 € | 444 € |
| 1.230 € | 1.273 € | 753 € | 785 € | 32 € | 384 € | 963 € | 998 € | 35 € | 420 € |
(1) Indexation with inflation of 9.6% year 2022
(2)Inflation indexation with 3.5% year 2023.
Gross pension amounts.
The increases in the new 2024 pensions for self-employed and self-employed
| Average contributions 2002-2023 | Average contributions 2002-2024 | Pension in 2023 with 32 years | Pension in 2024 with 32.8 years | Increase for 2024 | Pension in 2023 with 36.6 years | Pension in 2024 with 37.6 years | Increase for 2024 | ||
| Monthly | Annually | Monthly | Yearly | ||||||
| 280 € | 290 € | 864 € | 885 € | 21 € | 252 € | 1.019 € | 1.059 € | 40 € | 480 € |
| 320 € | 331 € | 926 € | 950 € | 24 € | 288 € | 1.103 € | 1.149 € | 46 € | 552 € |
| 360 € | 373 € | 988 € | 1.016 € | 28 € | 336 € | 1.188 € | 1.239 € | 51 € | 612 € |
| 400 € | 414 € | 1.051 € | 1.081 € | 30 € | 360 € | 1.273 € | 1.330 € | 57 € | 684 € |
| 440 € | 455 € | 1.113 € | 1.147 € | 34 € | 408 € | 1.357 € | 1.420 € | 63 € | 756 € |
| 480 € | 497 € | 1.176 € | 1.212 € | 36 € | 432 € | 1.442 € | 1.510 € | 68 € | 816 € |
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