Presentation on new draft law on occupational insurance framework.

The Minister of Labour and Social Security, Ms Niki Kerameus, presented, during a press conference held jointly with the Deputy Minister of Labour, Ms Anna Efthymiou, and the Secretary General for Social Security, Mr Konstantinos Tsagkaropoulos, the draft law entitled “Enhancement of the Occupational Insurance Framework: Expanded Opportunities for Employees and Enterprises”.

The purpose of the draft law is to improve the existing occupational insurance framework, with a view to rendering it simpler, more efficient, more protective and more attractive to employees and enterprises alike.

“We are establishing a more modern and reliable supplementary insurance framework, in addition to the first pillar of social security represented by e-EFKA. We support employees by enabling them to secure additional pension protection. We strengthen enterprises by allowing them to provide enhanced benefits and incentives. We reinforce the national economy by promoting household savings and creating new employment opportunities in the financial sector. We are laying the foundations today for improved protection and stronger retirement prospects in the years ahead,” stated the Minister of Labour and Social Security, Ms Niki Kerameus.

The Greek social security system is structured around three pillars.

Pillar 1: Mandatory Social Security

This constitutes the principal and most robust pillar of the system, with e-EFKA and TEKA serving as its primary institutions.

Pillar 2: Occupational Insurance

This pillar comprises Occupational Insurance Funds and group occupational pension insurance policies, which provide supplementary pension benefits.

Pillar 3: Private Insurance

This pillar consists of individual insurance policies.

The principal objective of the proposed draft law is to reinforce the second pillar of the social security system, namely occupational insurance, through the establishment of a modern and competitive framework for supplementary retirement savings. The new framework is intended to provide greater flexibility, strengthen the institutional safeguards applicable to occupational insurance and enhance its attractiveness to insured persons and enterprises.

The draft law is based on three principal axes:

First Axis: Greater Flexibility and Simplification of the Operation of Occupational Insurance Funds

The draft law provides for the introduction of Open Occupational Insurance Funds, with the aim of facilitating access to occupational insurance for smaller enterprises and self-employed professionals.
Open Occupational Insurance Funds will be licensed by the Bank of Greece and will be entitled to admit new enterprises, collective bodies and trade union organisations through a simplified and expedited procedure, without the requirement for prior supervisory approval.
The objective is to enable Occupational Insurance Funds to operate in a more timely, transparent and efficient manner, without compromising the applicable supervisory framework or the protection afforded to employees.

Second Axis: Enhancing the Attractiveness of Occupational Insurance for Employees and Enterprises

The draft law provides, inter alia, for the following:

● the rationalisation of the applicable tax framework, through the improvement of tax incentives and the decoupling thereof from the duration of insurance, with such incentives instead being linked to the age of the insured person;
● the abolition of the tax disincentive currently affecting employees who elect to participate in occupational insurance schemes at a later stage in their working life;
● the introduction of healthcare benefit schemes by Occupational Insurance Funds; and
● the establishment of a new occupational insurance product, namely the Group Occupational Retirement Insurance Product, to be issued by insurance undertakings and to afford insured persons protection equivalent to that provided under Occupational Insurance Fund schemes.

Third Axis: Strengthening the Protection of Insured Persons

The draft law provides, inter alia, for the following:

● Portability of rights. A central measure for the protection of insured persons is the full portability of their rights, so that any change in employment or professional status does not result in the loss, reduction or weakening of vested rights.
● Horizontal enhancement of transparency. As already applies to Occupational Insurance Funds, Group Occupational Retirement Insurance Products will also be subject to registration in a public register, rules governing the proper distribution of the relevant products, conflict-of-interest prevention requirements and obligations for the periodic provision of information to insured persons regarding the performance of their investments.
● the protection of unemployed persons through the possibility of their continued participation in occupational insurance arrangements;
● the upgrading of the investment framework applicable to providers of occupational insurance products; and
● the recognition of the right of insured persons to receive adequate information regarding the management and performance of their investments.

The new occupational insurance framework is expected to generate significant benefits for insured persons, enterprises and the national economy.

For insured persons, it is intended to strengthen retirement income, facilitate access to supplementary pension protection, safeguard and ensure the portability of vested rights, extend protection to self-employed professionals, enhance transparency and improve the quality of information concerning investment performance, while also enabling the provision of additional benefits.

For enterprises, it is expected to provide an additional instrument for attracting and retaining personnel, facilitate the provision of employer-funded benefits through collective bargaining arrangements, strengthen employer branding and corporate social responsibility, create opportunities for the management and enhancement of investment capital and establish a more functional framework for smaller enterprises that have, to date, encountered difficulties in accessing occupational insurance arrangements.

For the national economy, the framework is expected to contribute to the accumulation of investment capital, support the channeling of liquidity into the economy, limit capital outflows, promote long-term household savings, create new employment opportunities in the financial sector and reinforce the role of occupational insurance as an instrument of long-term saving, investment and improved pension adequacy.