Everything you need to know about purchasing insurance years in order to qualify for a pension or increase the amount of your pension
It is touted as the solution for those who do not accumulate regular insurance years in order to retire. The reason for fictitious years, which have been established precisely for this reason, is that those who do not complete the insurance days reach retirement. This is the right to recognize insurance years that have not actually been completed in order for the insured to secure an earlier retirement right or to increase the amount of his pension. This is a right that can be submitted at any time, before or after the year whose conditions they wish to secure, and at the latest together with the retirement application.
In this light, the fictitious years that can be recognized are:
• Military service of the insured: redemption of all service time.
•Parental care leave: buy-in all year.
•Educational license: redemption up to two years.
•Study time: acquisition of time according to the school’s study program.
• Children’s creative time: purchase up to five years.
•Empty periods of unemployment (as well as pregnancy and childbirth): the entire period without redemption.
•Regular OAED unemployment, up to 300 days without redemption (does not apply to public employees, as in the case of empty periods of unemployment in the private sector, for the recognition of fictitious years in the public sector).
Contributions are paid for fictitious years
The recognition is done by the insured paying all the contributions of the pension sector (employer and insured) for each month of recognized insurance time, at the rate in force at the time of submission of the redemption application.
The earnings based on which the contributions of the fictitious years are calculated are the insured’s earnings during the last month of employment preceding the month of submission of the redemption application. In practice, this means that the higher the salary someone gets, the more contributions they will have to pay.
So here is the big question. Is the purchase of fictitious years of insurance really worth it or not? What we need to know is that there is an unconsidered cost, which depends on the salary and the daily wage received by the employee at the given time when he decides to proceed with the acquisition, so depending on his daily wage he will pay an amount corresponding to 20 %. This means that it takes extreme care and study to make leap years work rewardingly.
In order to understand the amount of the amounts, we will take as an example an employee of the private sector whose salary in the last month is of the order of 1,000 euros. The employee of our example will have to pay for seven years of fictitious years (four years of studies, 24 months of military service and 12 months of unemployment) a total of 9,952 euros.
• four years of study which are equivalent to 48 months x 107.34 euros = 5,152 euros.
• 24 months of military service x 200 euros = 4,800 euros.
• 12 months of unemployment (it is free, since the one subsidized by DYPA, formerly OAED, is insured).
It should be noted that from 2020 exactly the same quota (20%) applies to civil servants, who previously could buy back notional years with a lower quota.
When no payment is required
The calculation of the time of absence from work due to pregnancy and childbirth and the days of subsidy due to illness or regular unemployment are taken into account exclusively for the establishment of a pension right due to old age and not for the determination of the entitled pension amount. Therefore, in this case, the payment of any amount by the insured is not required. On the other hand, since no insurance contribution is paid, even if fictitious, the pensionable salary does not increase.
Lump sum or in installments repayment
Based on an EFKA circular, one can pay the amounts owed in one lump sum or in installments. It is also possible to deduct from the amount of the pension. More specifically, the amount is paid:
•Once within three months of notification of the recognition decision with a 2% discount for each year of redemption. Redemption of time less than one year is not discounted.
•In equal monthly installments, depending on the number of months recognized (as many installments as the months recognized).
•In the event of the establishment of a pension right or an increase in the amount of the pension, the redemption amount is withheld every month from the pension – and until payment – an amount equal to 25% of the amount of the pension.
Who benefits and how?
For those who serve in the public sector, the fictitious years that count are military service, children and, of course, studies. In fact, due to the special provisions for civil servants who can leave early at 25 years, 20 years (with three children), 35 years, even 37 years, the fictitious years have helped many to leave.
Also, with the new insurance, as established by the Katrougalou law and copied by the Vroutsi law, the more you contribute to the system, the bigger pension you will receive. Therefore those who retire with more than 30 years of insurance may receive a higher pensionable salary.
Care must be taken here so that what will be paid does not fall short of the pension over a period of 13 years (the average expected period of pension payment). Special mention should be made of those who are close to 40; if they do not complete it with real years of insurance, they can overcome it with fictitious ones and thus reach 62 with a full pension.
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