The government’s economic staff are considering reducing or completely abolishing the personal pension differential to allow pensioners to receive increases they have been denied in recent years.

The personal difference applies to those who had retired before the implementation of the Katrougalos law (4387/2016). When pensions were recalculated, it was found that the new amounts were lower. To prevent immediate reductions, the personal difference was introduced, covering the difference between the old and the new pension. However, this mechanism prevents pensioners from receiving the annual increases until the difference is reset to zero.

In contrast, those who retired after May 2016 received lower pensions from the outset, without the personal difference. The possible modification or abolition of this mechanism could boost the income of thousands of pensioners by gradually bringing them into the system of annual increases.

Nevertheless, the abolition of the personal differential implies an increase in government spending, since the annual increases would apply to all pensioners. The government is considering the fiscal cost of the reform, taking into account possible offsetting measures such as the discontinuation of special allowances given on holidays.

If a drastic “haircut” of the personal differential is implemented, pensioners who, under the current system, would receive increases in 2030 will see them earlier, as part of the difference will be built into the pension and the remainder will be more quickly offset through annual increases.