Cyprus pension reform avoids cuts but unions raise concerns

Economy pensionerspensionsTop News Cyprus pension reform avoids cuts but unions raise concerns ΣΥΝΤΑΞΕΙΣ 2 1536x1152 Relevant News Cyprus pension reform avoids cuts but unions raise concerns 20 August 2026 Court to rule on custody in Paphos domestic violence case 20 August 2026 Trilogy Limassol Seafront: a dining destination 20 August 2026 Angelos Angelodimou 20 August 2026 FacebookXWhatsAppEmailPrintViber Cyprus’s planned pension reform will avoid cuts to pensions, reduce a 12% penalty and grant increases of up to 50%. But several questions remain over its provisions, according to a proposal presented to social partners on Wednesday. Speaking after a Labour Advisory Board meeting, Labour Minister Marinos Moushouttas said all 123,000 current old-age pensioners would benefit from the reform. He said around 50,000 of them would see monthly increases of more than €100 and around 60,000 would see increases of less than €100, phased in over five years. Future low-income pensioners, he added, could see increases of between 5% and 60% compared with the current system. Moushouttas said discussion would continue at the Board’s next meeting on August 28, with the reform still targeted for implementation from January 1, 2027. An informal session will be held earlier that day, before the Board meeting, at which the State Actuary will present “Pillar 0”, covering state social support and protection of low-income pensioners from poverty, and examine the government’s plan for low-income pensioners and their resulting benefit. Cost to public finances Central Actuary Costas Stavrakis said the reform secured the system’s long-term sustainability. He added that its cost to public finances in the short, medium and long term was a separate consideration, saying the system’s rationalisation would burden public finances by around €50 million a year over the first five years. The bigger impact on public finances, Stavrakis said, would come later. The fund’s projected surpluses over the next 40 years mean the state will stop borrowing from it altogether. He described this as a commitment that makes the Social Insurance Fund the state’s highest financial priority. Asked when the €12 billion the state has already borrowed from the fund would be repaid, he said some scenarios put it at around 40 years, adding that this sum was small compared with the surpluses expected to accumulate, which the state has committed not to retain. Key provisions According to the note the Labour Minister and his team gave social partners, the reform’s main changes are: An increase for all pensioners, reaching up to 50% in some cases. A reduction of the 12% penalty to 7.5%, applying to the basic pension portion. Wider insurance protection beyond the traditional link to employment. Subsidised contributions will apply to: women, for periods linked to childcare; informal carers providing full, unpaid home care to up to second-degree relatives; people with disabilities; students; and new entrants to the labour market. A new contribution requirement for a category of contributor termed “income earners,” covering income from public office, dividends, interest, rents, intellectual property or patent rights, fees and other property-related gains. Salaried employees who hold shares in the company they work for will also have dividends from that company counted towards their earnings under the reform. A minimum guaranteed increase for existing Social Insurance Fund pensioners receiving up to €600 a month, with a floor of €30 a month for all of them, paid from the first month the reform takes effect. Union and employer reactions Social partner officials told philenews they were broadly satisfied with the presentation and the atmosphere in which it was made, though they raised points of disagreement, requests for clarification, or gaps in the reform. All agreed that timelines are now tight and will require a push to meet. SEK General Secretary Andreas Matsas welcomed the absence of pension cuts. He noted, however, that the 12% penalty reduction applied only to the basic pension portion, meaning the actual benefit would be smaller than presented. Some pensioners, he said, would remain below the poverty line even after the reform, and he argued that without covering the second pillar, it could not be called a comprehensive pension plan. PEO General Secretary Sotiroula Charalambous pointed out that the increase figures in the ministry’s note, such as the roughly €200 example, refer to the five-year period, meaning pensioners would only reach that amount after five years, not immediately. Social partners, she added, would wait to see the government’s plan for low-income pensioners and how their final pensions would be shaped, and she stressed Provident Funds as a key outstanding issue. Charalambous criticised President Nikos Christodoulides directly for making public statements on the reform before the Labour Advisory Board had concluded its discussions, calling it disrespectful to social partners. She also argued it was problematic that the 12% penalty cut applied only to the basic pension, when the existing penalty applies to the pension as a whole. DEOK President Stelios Christodoulou said the reform was serious and had several parameters requiring in-depth examination to secure the best outcome. “This reform happens every 40 to 45 years,” he said, adding that the goal should be pension adequacy for future generations, factoring in Provident Funds capital as well as the Social Insurance Fund. KEVE General Secretary Filokypros Rousounides said the Chamber would seek to help implement the reform. He noted, though, that the presentation to the Labour Advisory Board had raised many questions at a time when timelines have become very tight. It would be positive, he said, if the second pillar advanced alongside the first, but it should not become an obstacle to implementing the reform. He reiterated that KEVE would not, under any circumstances, accept mandatory contributions to Provident Funds. OEV General Director Michalis Antoniou said employers would await further details in the coming days. He voiced concern over how the fund would be financed following the announced increases and other benefits, and said pensioners would need to be patient, as there was still some way to go before a final outcome. President: justice, adequacy and security The pension reform aims to deliver more justice, adequacy and security for every generation, President Nikos Christodoulides said in a video message on Wednesday. He described it as the biggest and most substantial pension reform since 1980, and, addressing pensioners, workers and young people directly, said: “This reform is being made for you.” He said the reform was made for the pensioner who deserves a better quality of life, the worker securing their future, and the mother who paused work to raise her children. It was also made, he said, for the fellow citizen with a disability who lacked equal opportunities to build up insurance contributions, young people studying and preparing to enter the labour market, and future generations who need a secure Social Insurance Fund. Subscribe to our Newsletter Latest News Court to rule on custody in Paphos domestic violence case Trilogy Limassol Seafront: a dining destination Theta Mediterranean: seafood by the water in Pervolia Biker accused of running down officer, fleeing scene, loses court challenge COP31: Ankara’s Cyprus snub triggers Brussels warning Fine weather expected Thursday, highs of 38C inland Cyprus disability benefits rise 10%, backdated to January Follow en.philenews on Google News and be the first to know all the news about Cyprus and the world.