Reduction of insurance premiums from January 1: what you need to know

From January 1, 2025 insurance premiums are reduced by one percentage unitresulting in negligible benefits for employers, private and public sector workers, and retirees.

The guidelines were issued by the Social Insurance Fund (ΕΦΚΑ) as a reduction of half a percentage point for employer contributions and a half percentage point for employee contributions will come into force from January 2025. Thus, business accounting departments should be prepared to withhold smaller contributions to ensure a small increase in employee income.

However, the state will also benefit, which, as an employer, “benefits” from paying lower contributions for government employees. That is, out of approximately 430 million euros, which is estimated as the cost of reducing contributions by one percentage unit, part of this amount is returned to the state budget through contribution savings.

According to ΕΦΚΑ's instructions, total insurance premiums will be 35.16% instead of 36.16% today, of which 13.32% (from 13.87% now) will be paid by employees, and 21.79% (from 22.35% now) – employers.

At the same time, employee health care contributions are 7.10%, calculated based on the employees' monthly income. Of this, employers pay a contribution of 4.55%, and employees – 2.55%. With the reduction, the contribution from January 1, 2025 will be 6.10% from 4.05% for employers and 2.05% for employees.

A percentage of 5.45% relates to benefits in kind, of which 1.65% falls on the insured and 3.80% on the employer, and 0.65% relates to cash benefits, of which 0.40% falls on the insured and 0. 25% – for the employer.

As for professionals and working retirees. It is clarified that the same reduction will apply to working pensioners if they have a salaried job, with a lower deduction of 0.5% on health care contributions that are withheld from their salary.

In contrast, there will be no reduction in contributions for pensioners working as self-employed.

According to another ΕΦΚΑ instruction, from December 13, 2024, the e-ΕΦΚΑ electronic service “Selection of insurance category of basic insurance, additional insurance and one-time benefits” has been activated for the self-employed, individual entrepreneurs and farmers, providing the opportunity to submit an application/application for changing the insurance category for 2025 .

If they do not apply, they are considered to be choosing to remain in the same insurance category as that year. In addition, most self-employed people choose the first, cheapest insurance category, which negatively affects the size of their future pensions.

Finally, it is noted that, according to a regulation adopted just before Christmas, self-employed contributions will increase from 1 January based on the consumer price index, rather than on the basis of the wage growth index. This is because the relevant commission has not reached a conclusion on its definition.

Thus, in the new year the increase in contributions for approximately 1.2 million professionals, self-employed and farmers will be about 2.7%.

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