What is hidden in the desperate attempt of the Mitsotakis government to convince freelancers to choose the largest insurance category with the argument “give a lot to get a lot”
Every year after 2020 the same situation. In an exaggerated role, the systemic media call on the self-employed to prefer larger insurance classes in order to receive larger pensions. It is Law 4670/2020 (Brutsis law) which reintroduced the insurance classes as a system for paying the insurance contributions of non-salaried employees. Since then we have been living the big lie “give a lot to get a lot”. The narrative is based on the logic of “the more you put in, the more you get” when you retire. In absolute numbers it is obvious. However, what the government of Kyriakos Mitsotakis is hiding in order to carry out yet another swindle at the expense of small and medium-sized enterprises is the ratio in the replacement rate. Like everything in the financial cycle, this is also judged based on the relationship between quality and price.
After all, is it worth it to join the higher insurance classes in order to get a bigger pension? Will he get back the money he gave all these years of working life, or will it stay at EFKA to “feed” the gold beetles imposed by the Kostis Hatzidakis to EFKA? So how will the average businessman who has been fighting for decades to pay his insurance contributions having joined the sixth insurance class feel when he learns that he will pay a total of 343,000 euros during 35 years of insurance life to get a pension of 1,406 euros and – based on average expected period of 13 years of the pension – will he be reimbursed €219,300 and thus have lost €123,000? Would it be better to join the lowest insurance class? Thus he will have paid 106,400 euros in 35 years, he will receive a pension of 735 euros and in the 13 years of the average expected pension payment period he will receive a total of 114,700 euros, which means he will have earned 8,300 euros.
The government’s narrative is in the bucket
If anything is a given from 2021 onwards, it is that small and medium-sized businesses are drowning in an economic reality determined by the government’s choices regarding the increase in the cost of running a business – mainly through electricity bills, because with the target model instituted by the Mitsotakis and Hatzidakis soared the cost of profiting the gas cartel – and the slush profit that siphons off consumer income, which is now directed towards paying bills, getting liquid fuel for transportation and basic food items. This has the effect of reducing the actual turnover of businesses in terms of volume.
This unfavorable situation for the real economy has saved many small brokers who choose the first insurance class. This is a choice that results from the need to reduce expenses in order to survive. Thus the “scam” of the Mitsotakis government, which asks the freelancers to pay the EFKA golden boys, has not worked. Out of a total of 1,310,404 professional TINs in 2023, 1,173,302 (89.53%) chose the first insurance class. On the other hand, only 12,621 (0.96%) VAT professionals have fallen victim to Mitsotakis and Vroutsis fraud. As of the publication of this insert, the figures for the non-salaried options for 2024 were not officially known. Unofficially, we know that the percentage of the first insurance class increased and briefly exceeded 90%.
Unveiling monstrosity
It was advertised as a provision for small middlemen by a government that protects the interests of businesses and supposedly abolishes the Katrougalou law.
The reason for the fact that the entrepreneurs of the country can choose an insurance class per year (in the pre-Katrougalos system, it was mandatory to join a higher insurance class depending on the years). However, the right of choice was given, since with such replacement rates in the big classes, the business world would have risen up. Since then, every year – the choice must be made by January 31 of each year – we have been living the failed but desperate attempt of the Mitsotakis government to convince the unemployed to change their category.
As is easily understood, for four years the effort has been in vain despite the “kind offer” of the systemic media. 90% choose the first, lowest class. This is where the dead ends of the system come in, given that on the one hand the large insurance classes do not operate remuneratively and proportionally produce lower pensions, while on the other hand the selection of the low categories dramatically limits the revenues of the EFKA, putting its operation in immediate danger.
Therefore the system of insurance premiums (law 4670 Vroutsi which replaced the Katrougalou law, law 4387) is not so much a monstrosity that targets the pensions of the large categories, grabbing money as insurance contributions that are not returned. As shown in the relevant table, while everyone has the same 35 years of insurance, the replacement rate in relation to the contributions (reduction in salary) of the first class amounts to 87%, of the sixth class, on the contrary, it falls to 51%, while of the highest insurance falls even lower, to 38%!
Also comparing the pension differences with respect to the first, we see: while the sixth category has higher (322%) contributions, the pension only increases by 191%! Accordingly, the maximum insurance pension, with even higher (838%) contributions, only increases by 372%. As it turns out, no one above the second insurance class receives as a pension the sums of money that he himself paid in insurance contributions.
In fact, the corresponding interest-free amounts are not returned in the fifth and sixth categories. With the reduction to the maximum salary, we see that net sums (without interest) of 598,500 euros will be paid and only 426,700 euros will be returned.
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