By Evgenia Tzortzi
The new year is set to bring an increase of 40 to 60 percent to private pension programs and healthcare insurance policies for those who wish to sign new contracts.
Pension programsí soaring costs are rendering access to private social security even more difficult, at a time when public social security provisions are decreasing and people are seeking solutions that will secure them a decent pension in the future.
Premium hikes are not the outcome of the policy of insurance companies. Rather, they are due to external factors and developments at the European level. Their combination is leading to a radical change in the insurance products available in this country.
The first change concerns the application of a directive that forbids sex discrimination in the pricing of insurance products. This ban has been imposed through a European Union directive drawn up following a case brought to the European Court by a Belgian consumer group and will apply as of December 21.
Another serious reason for the premium hikes is the revision of life expectancy charts that insurance companies base their calculations on. The charts, which show expected longevity per age group, were recently updated by the Bank of Greece and will apply from the start of 2013. Both men and women are now expected to live longer than in the past and this will be reflected in insurance policies.
Regarding sex discrimination, to date, women have paid higher premiums for pension products than men, as the fact they tend to live longer meant they would need more money in order to amass the stock to secure them the pension agreed with the insurance firm, which must be paid for more years than in the case of men.
One would have expected that this would lead to a reduction in womenís premiums and an increase in menís, but that is not the case. The reason for that is the life expectancy charts, whose application pushes premiums higher for both sexes.
For example, previously, a 40-year-old man signing a new pension contract would pay 2,215 euros a year to secure 500 euros a month at the age of 65, but with the new tariffs he will have to pay 3,475 euros per annum, while a 30-year-old woman paying premiums of 1,560 euros a year to get a 500-euro pension when she hits 65 will now have to pay 2,280 euros per annum.
This dramatic hike in premiums for men and women is also attributed to a third factor: This is the interest rate on which guaranteed pension, which the insurance company is committed to paying, is calculated. The downward course of the markets has seen all investments by insurers yield less, forcing them to reduce their rates. That means that the insured will have to pay more money now to amass the required amount by the end of their working years.