On 1 April each year pensions grow higher because they are indexed.
Indexation serves the purpose of keeping pensions in balance with changes in wages and prices.
To this end the Government of the Republic approves a new index each year. The index is calculated as follows:
- 80% – change in receipt of the pension insurance part of social tax in the previous year;
- 20% – change in the consumer price index of the previous year.
Indexation is only applied if the aforesaid increase. But if they decrease, pensions will not be reduced.
Both the base amount of pension and the value of a year of pensionable service are increased upon indexation.
The base amount of pension, which is the same for all recipients of pension, increases more than the value of a year of pensionable service. This aims to quickly grow the part of pension which is paid to all pensioners in an equal amount regardless of their contribution by working. This also helps those being paid a smaller pension to cope better.
The new value of a year of pensionable service is also the same for everyone but since the value of a year of pensionable service is multiplied by the part that depends on a person’s length of employment, pensions increase differently due to indexation – longer length of employment means a bigger increase and vice versa.
Base amount of pension
The base amount of pension is the foundation of pensions that is the same for everyone.
As of 1 April 2023 the base amount of pension is 317.9193 euros.
Value of a year
The value of a year of pensionable service is the value of one year of pensionable service or an insurance component.
As of 1 April 2023 the value of a year of pensionable service is 8.684 euros.
Those who lack the required minimum pension qualifying period (15 years) are paid national pension. The rate of this pension also changes each year upon indexation.
As of 1 April 2023 the national pension rate is 336,39 euros.
Last updated: 05.04.2023