The reform with debts to EFKA, for around 40 thousand self-employed workers and farmers, hides “traps”, in terms of the value of the debt and in terms of the related parameters with the lifting of banking secrecy.
The online platform is not expected to be activated before mid-July, so interested parties still have time to decide whether or not to submit their application. However, to make the final decision, they should be aware that the debt limit may will be increased to 30,000 euros (from 20,000 euros) for freelancers and 10,000 euros (from 6,000 euros) for farmers to grant a pension, but again the excess amount must be paid once. In fact, the possibility of a two-month period is foreseen, from the moment the EFKA will notify the interested party of the respective debt document, so that any decision can be made by the insured. According to the Agency’s circular, the specific deadline is definitive and after its end any application submitted will be rejected by the competent services.
Removal of banking secrecy
Especially with regard to lifting banking secrecy, the interested party should know that all their personal information will also be shared with Independent Public Revenue Authority (AADE). Thus, the consent he gives will not only concern banking secrecy, but also indirectly tax secrecy. In more detail, the regulation provides for the retention of 60% of the pension that will be paid until the amount of the debt decreases from 30,000 euros to 20,000 euros in the case of self-employed workers and from 10,000 euros to 6,000 euros in the case of farmers. From the limit of 20,000 euros or 6,000 euros respectively and until the debt is cleared, the repayment will be made in 60 monthly installments, as is the case today. Let us take a closer look at the “traps” hidden by retirement with debts:
- Debts may exceed 20,000 euros or 6,000 euros for debts to the OGA and up to 30,000 euros for professionals and 10,000 euros for farmers. If the total amount of debts exceeds 30,000 euros or 10,000 euros, as the case may be, a debt document is notified so that the insured person can pay the excess amount in a single payment. A period of two months is granted from the notification of the specific document to make the payment of the amount exceeding the above limits. After that, the insured person may be subject to the provisions of this regulation and make use of the provisions governing the granting of the outstanding pension due to debt. After the two-month period provided for, the institution must reject the application for retirement due to debts.
- In order to submit the application, in conjunction with the pre-determined amount of the debt, the interested party must cumulatively meet the following conditions: Be aged 67 or over, or have an insurance period of at least 40 years, at the age of 62. Have paid the contributions corresponding to an insurance period of at least 20 years or 6,000 days of insurance, regardless of the previous entity participating in the allocation of the pension. Their bank deposits must not exceed the value of: i) 12,000 euros in general or ii) 6,000 euros, since they are the exclusive debtor of the OGA. To calculate the value of the bank deposits, the following are considered cumulatively:
The total amount of deposits held by the insured-debtor in all bank accounts opened in the name of the interested party will be subject to regulation. The amount will be determined at the end of the month preceding the date of submission of the application for inclusion in the agreement.
The average of deposits over the last 12 months prior to the date of submission of the application for inclusion in the agreement.
- The applicant’s necessary personal data is transmitted electronically to the financial institutions, from which information on the deposits held with them, as well as their appraisal value, will be retrieved within ten working days. Together with the application for membership, the insured person will give his/her consent to the financial institutions and the Independent Tax Authority (AADE) to notify the e-EFKA of the necessary documents and data. This then constitutes consent to the lifting of banking and tax secrecy.
- The excess amount of 20,000 euros for professionals or 6,000 euros for farmers is offset by 60% of the monthly amount of pensions paid, until it reaches zero. The net monthly amount cannot be less than 333.33 euros if the debtor is a self-employed worker, and 100 euros if the debtor is a farmer insured by the OGA. The remaining debt, after zeroing the deductible of 20,000 euros if the debtor is a self-employed worker, or 6,000 euros if the debtor is a farmer insured by the OGA, is retained in the amounts of subsequent pensions in equal monthly instalments that cannot exceed 60 euros, while the value of each instalment cannot be less than 50 euros.
- Retirement applications submitted before the regulation came into effect (Law 5,078/2023, i.e., up to 12/20/2023) and pending at any stage of the administrative process may be subject to the regulation of the new law, provided that a new application is submitted by the insured. Even if the related applications have been denied due to debt, the interested party may submit a request and request a review of their case, in accordance with the new regulation.