Taxes and deductions combined with high inflation are worsening the already challenging economic situation for Greek pensioners, who are faced with overall deductions that could reach 22%.
Approximately two million pensioners in 2025 are expected to see an increase of between 2.2% to 2.5% in their pensions, an increase anticipated to be paid out before Christmas.
The factors that will determine pension increases are the forecast for economic growth and the inflation rate for this year, with current pensioners and those applying for retirement by December 2024 entitled to the increase.
However, many pensioners will not benefit from this increase due to the deductions they are subjected to.
More specifically, around 400,000 pensioners pay a double and arguably unfair tax through the solidarity contribution, which, due to its fiscal cost, will not be restructured.
Furthermore, due to annual increases, many insured individuals move into higher contribution categories, resulting in even heavier taxation. Thus instead of receiving a rise they experience a decrease in their income.
Additionally, a 6% deduction is applied to the initial gross amount of each pension for healthcare services.
Following these deductions, the final amount on a 12-month basis becomes the taxable income for the pensioner, subject to income tax under current regulations. This means a progressive tax rate is applied, with the corresponding tax discount, leading to the final result.
It should also be noted that the ‘personal difference’ system prevents 770,000 older pensioners, namely those who retired before 2016, from benefiting from future increases until their personal difference is nullified. This serves more as a cap.
Currently, one in three Greek pensioners in the EFKA public insurance system still has a ‘personal difference’, as the increases in 2023 and 2024 managed to reduce but not eliminate the number of frozen pensions.
