Greece is preparing changes to the framework governing Occupational Insurance Funds, known as TEAs, in an effort to broaden access to second-pillar pension savings and allow more workers to build a supplementary pension alongside public social security.

The draft bill was presented to the cabinet today by Labour Minister Niki Kerameos and is expected to be put out for public consultation in July before being submitted to Parliament in the autumn.

According to the minister, the proposed framework introduces greater flexibility and makes occupational insurance more attractive, without reducing support for the first pillar of public insurance, Greece’s main social security agency EFKA.

The bill also includes changes to the taxation of benefits. The current system, which links tax treatment mainly to the number of years a person has participated in a fund, will be replaced by a model based primarily on the age at which the insured person receives the benefit. The closer the exit from the scheme is to retirement age, the more favourable the tax treatment will be.

However, the tax changes remain one of the more sensitive points in the talks with stakeholders. The final details are expected to be settled at a later stage, as consultations continue.

At present, the assets of occupational pension funds in Greece account for no more than 1% of GDP, far below levels seen in EU and OECD countries with more developed second-pillar pension systems. There are currently 27 occupational pension funds operating in Greece, with around 55,000 participants and an average individual account balance of about €10,500.

The draft legislation introduces three main changes: the creation of open occupational pension funds, the introduction of a group professional pension insurance product, and full portability of accumulated rights.

Open funds for small businesses and professionals

The first major reform is the creation of Open Occupational Insurance Funds, designed to make occupational insurance more accessible to smaller businesses and self-employed professionals.

The measure reflects the structure of the Greek economy, where around 90% of businesses employ up to 10 people. For many of these companies, setting up an independent occupational fund is either impractical or too costly.

Open funds, also described as umbrella occupational funds, will allow social partners, employers’ groups and other collective bodies to offer access to occupational insurance without each company needing to create a separate fund.

These funds will require an operating licence from the Bank of Greece and will have to meet governance and regulatory compliance standards. Once licensed, they will be able to accept new businesses, professional bodies and trade unions without requiring separate supervisory approval for every individual enrolment.

In practice, a small business that cannot establish its own TEA will be able to join an open fund and offer employees an additional pension benefit. Self-employed professionals will also gain easier access to occupational pension savings.

New group pension insurance product

The second major change is the introduction of the Group Professional Pension Insurance Product, or OAPES.

This product will also fall under the second pillar of the insurance system but will be issued by insurance companies. According to the draft framework, it will provide protection for policyholders’ rights equivalent to that offered by TEA programmes.

OAPES products will be supervised by the Bank of Greece under the same strict framework that applies to occupational pension funds. They will also receive the same favourable tax treatment as TEAs.

The aim is to align operating rules, supervision and tax incentives between occupational funds and group pension insurance products, avoiding distortions in the market.

Full portability of pension rights

The third key reform concerns portability. Workers will be able to transfer their accumulated rights more easily when they change jobs or professional status.

This is intended to ensure that a change in employment does not lead to the loss or weakening of already established pension rights. An employee moving to a new employer, for example, will be able to transfer their rights to another occupational insurance provider more easily.

The government says this added flexibility will be accompanied by stronger supervision from the Bank of Greece, ensuring better protection for insured members.

Further changes in the bill

The draft bill also allows insured members to remain in occupational insurance even if they lose their professional status, including in cases of unemployment. This means that job loss will not automatically interrupt occupational insurance coverage.

The current requirement of 100 members to establish an occupational fund will be abolished, while the licensing process by the Bank of Greece will be simplified.

The bill also removes the need for a fund to amend its articles of association for certain operational changes. Under the new framework, a TEA will be able to create or modify a plan for an already participating sponsoring company through a decision of its board of directors.

The age of exit from the system will become the central criterion for tax treatment, rather than the number of years of insurance. This change is intended to simplify the framework and address practical problems created by the current system.

The tax penalty affecting people who join a TEA at an older age will also be abolished, while there will be no upper age limit for participation.

Occupational funds will be allowed to offer health programmes to their members, provided the relevant risk is fully covered by an insurance or reinsurance company, or by a healthcare provider through a fixed per-capita cost contract.

The bill also introduces the possibility of insuring family members of the directly insured person.

In addition, the contribution cap will be adjusted to more favourable levels, with the current 20% ceiling being abolished.

The government says the new framework will strengthen transparency, reliability and the insured person’s right to information about the performance of their investment. Standardised procedures and forms will also reinforce the supervisory role of the Bank of Greece.

Officials argue that the wider economic benefit will be the accumulation of long-term investment capital, increased liquidity in the economy and a reduction in capital flight. The government also sees occupational insurance as a tool for strengthening household savings, supporting investment and improving pension adequacy over the long term.