Actuarial Study

The Actuarial Report shows a rather negative demographic trend for the auxiliary pensions sector.  While in 2021 the ratio of active insured persons that contributed to auxiliary insurance to pensioners receiving an auxiliary pension was 2.67:1, it is expected to drop to 1.60:1 by 2045. Therefore, the replacement rates that the current pay-as-you-go auxiliary pension system will be able to support in the not so distant future are expected to decrease. 

The new defined contribution auxiliary pension scheme is a timely safeguard against the demographic risk. 

The transition to the new system will be gradual.  It concerns new entrants to the labour market and, optionally, from 2023, insured persons under the age of 35. The gradual transition is consistent with the slow maturation of the new auxiliary insurance system. 

Due to the gradual maturation of the new system, the transition cost of the reform is backloaded. (The transition cost is the necessary additional direct or indirect financing of the old system (NDC) from the State Budget in order for the benefits of the insured persons and pensioners remaining in the old system to continue to be calculated according to existing rules without being affected by the reform.)

According to the basic scenario and assuming that the yield of the defined contribution system is equal to the yield of the long term bonds of the Hellenic Republic, the new system will pay auxiliary pensions which on average will be 10%-15% higher than the pensions that would be paid without the reform.