Understanding the Greek Pension System
Greece reformed its pension system in 2022, introducing TEKA as an alternative to the traditional ETEAEP supplementary pension. While your main pension from e-EFKA remains unchanged, you now have a choice for the supplementary portion—roughly 6% of your salary. This decision can significantly impact your retirement income, especially for younger workers.
TEKA: The Defined Contribution Approach
TEKA works like a personal investment account. Your contributions (3% from you, 3% from employer) go into a fund that invests in stocks, bonds, and other assets. Your eventual pension depends on how well these investments perform over time. You can choose from three risk profiles: conservative, balanced, or growth.
Key difference: TEKA contributions are YOUR money in YOUR account. If you pass away before retirement, the balance goes to your heirs. ETEAEP contributions go into a shared pool with no inheritance.
ETEAEP: The Traditional Pay-As-You-Go System
ETEAEP operates on solidarity principles: today's workers fund today's retirees. Your pension is calculated based on your years of contribution and salary history, not investment returns. This provides predictability but depends on the ratio of workers to retirees remaining favorable. However, the state guarantees minimum pension levels regardless of demographics.
Who Should Choose TEKA?
TEKA generally favors younger workers (under 40) with longer investment horizons. If you have 25+ years until retirement, compound growth can significantly boost your pension. Higher earners may also benefit, as TEKA has no contribution ceiling on returns. Additionally, those who value the inheritance feature find TEKA more flexible.
Who Should Choose ETEAEP?
ETEAEP suits workers closer to retirement (50+) who cannot afford market volatility near their retirement date. It's also appropriate for risk-averse individuals who prioritize certainty over potential higher returns. Lower earners benefit from ETEAEP's redistributive nature. If you've already accumulated significant years in the traditional system, switching costs may outweigh benefits.
Making the Switch: What You Need to Know
New employees are automatically enrolled in TEKA but can opt out to ETEAEP within 6 months. Existing ETEAEP members can switch to TEKA, but this is a one-way decision—you cannot return to ETEAEP once you've chosen TEKA. Your accumulated ETEAEP rights remain frozen. Consider consulting with a financial advisor to model different scenarios.
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Use our tax calculator to see how TEKA vs ETEAEP affects your take-home pay.
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