A new “haircut” is underway for insurance debts over 20,000 euros

By Dimitris Katsaganis

A new regulation with a “haircut” of insurance debts over the amount of 20,000 euros is on the table of competent executives of the Ministry of Labor, with the aim of reducing the “mountain” of overdue pending retirement applications, but also to avoid a recurrence of this phenomenon in the future .

This examined regulation, according to sources of Capital.gr in the Ministry. It could only apply to those professionals who have established or will establish a future pension right and will pave the way for their retirement, albeit with a lower pension, as the “haircut” of debts will be accompanied by a “haircut” of the corresponding insurance years in them.

In fact, this regulation in question is not excluded to apply to those retirees who have already joined a regulation for debts over 20,000 euros.

The suggestions

More analytically, secure information of Capital.gr states that the examined regulation will concern those self-employed and self-employed who establish a pension right (ie they have at least 15 years of insurance and have turned 67), but have debts that exceed the “ceiling” that allows their retirement, ie 20,000 euros.

Specifically, it is considered to “cut” the amount that exceeds 20,000 euros, while the remaining 20,000 euros, as already in force, can be repaid in up to 60 installments through withholding from the pension.

The price, however, for those professionals who choose such a thing will be the “haircut” and the insurance years, which correspond to the amount of more than 20,000 euros, thus reducing the pension of any professional who chooses such an arrangement.

Thus, according to the same scenario, if a professional owes more than 20,000 euros, but has completed 15 years of insurance, has obviously paid the corresponding contributions, and has turned 67, he will be able to receive at least the corresponding pension, ie around 420 euros, while the remaining 20,000 euros to pay them through 60 monthly installments on their pension for 5 years. However, because in such a case, the available pension, after the deduction, would fall very low, it is considered at the same time, to enter a minimum ceiling, eg at the national pension limit of 346 euros, which would lead, if de facto adopted in a larger number of doses, ie in more than 60 doses. Alternatively, although it is estimated that it would be difficult to pass, according to the same sources, for these cases of debtors, the debt limit for retirement could fall below 20,000 euros.

In fact, this regulation could possibly have retroactive effect, ie to include those who have already retired, entering the regulation of 120 installments, either having recalculated and “cut” (through the Katruggalo law), or not. In this case, for any debtor who decides such a thing, there could be a retroactive “haircut” of his debt and, thus, its installments, but also a recalculation of the pension.

The same regulation is being considered for the farmers and will give the possibility “haircut” of the amount of the debt over 6,000 euros, but also of the insurance times that correspond to this excessive amount and, thus, of its pension.

Moreover, according to the same sources, the relevant possibility will be permanently “open”, ie there will be no deadline for submitting an application, after which no one will be able to benefit from the “haircut” and the payment of the pension.

This scenario “plays” in parallel with others such as the possibility of “cutting” debts over 10 years, as dictated by the recent decision of the Council of State or restoring the possibility of recalculation of contributions for the period 2002-2006 and for those who do not had submitted a request to determine their debts until October 2019. Also, according to the same sources, “plays” the scenario of further increase of debt limits (possibly installments) for retirement (ie above them 20,000 for professionals and over 6,000 euros for farmers).

The problem

The above-mentioned scenario is being examined at the Ministry of Labor due to the large number of insured persons of the former OAEE and the former OGA, who have debts above the prescribed limit.

According to information from Capital.gr from the pending retirement applications, the 53,000 concern professionals and farmers.

Of these, 20,000 have been blocked due to excessive debts, ie debts in excess of 20,000 euros (for professionals) and 6,000 euros (for farmers) and thus, block the retirement of debtors, as they are unable to pay lump sums.

The same sources state that the debts of most of these debtors were born during the last decade (due to crisis, Memoranda, etc.), while they increased even more during the pandemic of the last two years.

However, these debtors are not alone, but others will follow, as well, obviously. every year new insured persons establish a pension right. This will further increase the number of professional debtors (including pending pension applications, at a time when the government is committed to the institutions to eliminate them by June 2022), who although have paid at least 15 or even above years, they will not be able to retire.