A new law passed by Greece’s Ministry of Labour introduces significant changes to voluntary professional pension insurance (PPI) starting 1 January 2027. The reforms aim to encourage higher personal savings for retirement while offering enhanced tax benefits—particularly for employees and self-employed professionals. These adjustments apply exclusively to voluntary schemes, including Professional Pension Funds (TEA) and group occupational pension products. They do not affect mandatory social security contributions paid to EFKA—the Greek Social Insurance Institute.
Higher Contribution Limits
For employees, the maximum annual contribution limit rises from 20% to 35% of gross salary plus taxable in-kind benefits included in taxable income. This ceiling is shared between employee and employer contributions, meaning both parties’ payments count toward the same cap. Contributions across multiple PPI plans are aggregated.
As an example: An employee earning €30,000 annually in gross wages—and eligible for the new upper limit—can now contribute up to €10,500 per year, up from €6,000. That opens an additional €4,500 in annual tax-advantaged savings potential, potentially matched or supplemented by employer participation.
Self-Employed Professionals: New €35,000 Cap
For the self-employed, the annual statutory contribution ceiling increases from €20,000 to €35,000. This amount will be adjusted annually in line with inflation. As with employees, contributions reduce taxable income under current tax rules—but the actual tax relief depends on each individual’s overall tax situation and contribution level. It is not a flat tax refund.
Age-Based Eligibility Rules
The higher limits do not apply universally. Individuals who first enrolled in a voluntary TEA or group occupational pension scheme after turning 55 remain subject to the previous caps: 20% for employees and €20,000 for the self-employed. Crucially, eligibility hinges on the age at first enrolment, not current age. A 60-year-old who joined a TEA at age 45 continues to qualify for the full 35% or €35,000 limit.
Taxation of Future Benefits
For amounts accumulated from 2027 onward, the tax rate applied upon payout will depend on the beneficiary’s age at the start of benefit payments, not their age during contributions. For retirees aged 62–67, the tax rate is 5% on periodic pensions and 10% on lump-sum withdrawals. Those aged over 67 pay reduced rates: 2.5% on annuities and 5% on one-time payments.