9 out of 10 professionals choose a low contribution

By Kostas Katikos

Low insurance contributions are a trap for poverty pensions for 9 out of 10 professionals.

According to EFKA data, of the 1,189,882 self-employed insured (professionals and farmers), 1,057,743 remained in 2024 at the lowest insurance premium of 1of the category.

The first effect is that the average of the contributions on the basis of which the compensatory pension is calculated falls, and the second is that the amount of the pension that will come out is considerably smaller compared to the pensions given by the higher contributions.

For example:

*The pension that the contribution of 1category with 30 years of insurance is only 658 euros. At 35 years the pension is 754.18 euros and at 40 years of insurance it reaches 874.62 euros.

*The pension that the contribution of 2 makes todaycategory with 30 years of insurance is 704.37 euros. At 35 years the pension is 819.79 euros and at 40 years of insurance it reaches 964.33 euros.

According to EFKA data for 2024 on 1the category chosen by 657,808 out of 769,907 freelancers (ie 85%) stayed in the cheapest category. Only 4,644 chose to move to a higher bracket, while 6,905 moved from a higher to a lower contribution bracket.

The picture is the same for farmers. Of the 419,915 insured, 399,935 (95%) stayed in 1the cheapest category, 19,980 remained unchanged in the following categories and moved 1,331, of which 872 chose a larger category, while 459 went to a smaller one.

It’s 5 o’clockthe consecutive year in which the majority of professionals and farmers remain stable at the lowest premium, while if we add the years 2016-2019 when the minimum pension contribution was for many at 157 euros, the period of low contributions reaches a decade.

At levels above the average, the contributions move from 3category and above, so the pensions for those who remain in the highest categories will be better.

For example:

*The pension that the contribution of 3 makes todaycategory with 30 years of insurance is 779.16 euros. At 35 years the pension is 925.60 euros and at 40 years of insurance it reaches 1,108.99 euros.

*The pension that the contribution of 5 makes todaycategory with 35 years of insurance is 1,207.05 euros and with 40 years of insurance it reaches 1,474.74 euros.

*The pension that the contribution of 6 makes todaycategory with 35 years is 1,484.26 euros and at 40 years of insurance it reaches 1,872.8 euros.

Lower pension calculation base

The risk of poverty pensions is greater for those who are up to 5 years away from retirement because with the low premium they have lowered the pension calculation base.

“Low contributions will lead professionals to a low pension and a low standard of living during their retirement life,” the Deputy Minister of Labor and Social Security, Panos Tsaklougo, recently stated in statements (ERTnews) saying that “the vast majority of self-employed professionals choose the lowest insurance class, paying contributions lower than those of the minimum wage earner.

The results caused by the low contribution option are already visible for insured persons who, after 2016, with the income-based contributions established by Law 4387/16 (Katrougalou Law), paid the minimum pension contribution of 157 euros until 2019. With the disconnection of income contributions with Law 4670/2020 (Vroutsi Law) the majority chose 1the lowest category for another three years (2020, 2021, 2022), completing a 6-year period with low contributions. This 6-year period significantly lowered their average contributions and already those who retired in 2023 found that they got up to 150 euros less in pension because their average contributions dropped. About 350,000 professionals have been trapped in the trap of low contributions, who entered the debt regulation of Law 4611/2019 and chose to recalculate their debt from 2002 to 2016 with the lowest contribution! With the recalculation, they won a haircut of up to 50% in their debt, but they definitely lost a 20% to 30% of their pension, because it will be calculated with the minimum contributions.

What pensions do the new contributions “make” for the self-employed

Which insurance categories did professionals and farmers choose for 2024

Source: EFKA