The Greek government is to make sweeping changes to its supplementary pensions savings framework in order to increase second pillar coverage.
The changes are intended to give easier access to retirement saving, provide flexibility, improve portability and streamline the tax framework.
A draft bill was presented to cabinet last June by Niki Kerameus, minister of labour and social security, before it went for a public consultation that closed last week.
At present, occupational pension funds operating in Greece manage total assets of under 1% of the country’s GDP, the lowest level for OECD countries as at end-2024. Total membership is 55,000 out of a population of 10m.
Workplace pension funds are normally set up as occupational insurance funds (TEAs), which, however, are costly to create for small businesses. More than 90% of Greek businesses employ fewer than 10 people.
Single fund covering multiple employees
The bill introduces open TEAs, which will allow industry associations and professional bodies to establish a single fund covering multiple employers.
A group occupational pension insurance product, or OAPES, will also be introduced, provided by insurance companies and offering an alternative to a fund structure for employers.
Tax incentives, applying to all plans, will include 100% tax deductability for contributions, with increases in contribution ceilings to 35% of annual income for employees, and €35,000 a year for freelancers.
The taxation of benefits will depend on the age of the worker at retirement, rather than the number of years’ contributions.
The bill also establishes full portability of rights between all the plans.
“The reform is timely,” said Panagiotis Antonopoulos, CEO of Alpha Asset Management. “As demographic pressures increase, supplementary retirement savings will become increasingly important alongside the public pension system.”
However, he said legislation alone will not be sufficient.
“A stable tax and regulatory framework, effective supervision and clear communication to participants will be essential to build trust and encourage wider participation,” Antonopoulos said. ”Strengthening financial literacy will also play an important role.”
“The introduction of open occupational funds is a significant step forward,” added Christos Papadogiannis, chairman of the board of directors of Greece’s Association of Occupational Insurance.
“It allows sectoral associations and professional bodies to establish a single fund covering multiple employers, dramatically reducing the cost and administrative burden that individual companies would face,” Papadogiannis said.
“This model has proven successful across Europe and is particularly well-suited to Greece’s economy, where small and medium-sized enterprises dominate.
“Our view is that occupational insurance should be exclusively supplementary in nature, with employee participation remaining optional, but when it is decided, it should be ensured through the guarantees of participation, information and consultation inherent in collective labour agreements,” he added.
“It is also crucial to ensure equal participation of employees in the management of pension funds.”
A step in the right direction
“One feature that the reform is not introducing is auto-enrolment, which has proven to be a powerful tool for broadening pension participation,” said Karin Franceries, Amundi’s head of business and strategy, retirement solutions.
She highlighted the dramatic increase in the UK’s workplace pension membership, with eligible employees enrolled rising from around 55% to more than 88% in 10 years.
“That kind of step change in coverage is difficult to achieve through voluntary frameworks alone, however well designed they may be, and it is worth keeping in mind as Greece builds out its second pillar,” she said.
She agreed that the reform is a step in the right direction, but cautioned: “There is a lot to get right across access, engagement and investment strategy, and the best pension systems we see around the world tend to address all of these dimensions together.”
As to Amundi’s potential participation in launching the new products, she said: “This is certainly an area we are looking at closely.”
The bill is expected to be submitted to parliament this autumn.
