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Greek Gov't Considers Cutting Pensions in Exchange of Security Contribution Debts

oaee_6The Greek government is considering to exchange debts from unpaid contributions to security funds with lower pensions for the self-employed.
Those with outstanding security contributions to the fund for the self-employed (OAEE) who are unable to pay, may be given the option to receive reduced pensions upon retirement, in proportion to the amount of their debt.
The aim of the proposal is to protect the OAEE pension fund that is on the brink of collapse. Specifically, out of 701,148 insured in the fund, 538,087 are behind in paying their contributions or are unable to do so. Of those, 296,720 have debts to the fund and another 241,367 have temporarily cut off their insurance as they stopped working. Accumulated debts reach 12 billion euros.
The idea came from representatives of small and medium-sized businesses. The ministries of Labor and Finance are now examining the proposal in order to present it to the country’s creditors.
The ministries will propose freezing the debts to OAEE accumulated during the financial crisis, along with fines and penalties. Once the total sum of the debt is calculated, debtors will be asked to pay an interest rate of 1 to 1.5 percent on it per year. Provided that they can start paying their future contributions on time, they can expect to receive a reduced pension from OAEE upon retirement.
If the insured self-employed choose so, they can continue working longer years until they can qualify for a full pension.

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