€50m annual cost of pension reform ‘within the state’s financial capabilities’

The additional €50 million per year which the government’s planned pension reform will cost the taxpayer for the first five years after the reform’s implementation falls “within the framework of the state’s financial capabilities”, employers’ and industrialists’ federation (Oev) director-general Michalis Antoniou said on Thursday. “The first impressions are that this is a serious effort, within the framework of the country’s economic capabilities, at first glance,” he told the Cyprus News Agency, before adding that “a comprehensive approach is being taken, but we need to look carefully at the details”. Asked about the discussion held on Wednesday when the government first presented its plans to employers’ organisations and trade unions, he said that it was “the first time it was so productive since this effort began, since the issues were now concrete, with numbers, scenarios and understandable examples”. On the matter of the €50m per year expense for the taxpayer, he said that it will be examined “with the help of our advisors”. Related Articles • Every single pensioner to receive pay boost, Mousiouttas says of reform • ‘Biggest pension reform since 1980’ presented to stakeholders • Pension reform discussion gets underway at Labour Advisory Board • No pension cuts under reform, labour minister assures • Doubts raised over pension reform bills being ready next month “This expenditure, provided that it is combined with the rationalisation of distortions, is at first glance a manageable expenditure,” he said. Nonetheless, he said, “we still need some clarifications from the labour ministry regarding what it is proposing”. Cyprus chamber of commerce and industry (Keve) secretary-general Philokypros Rousounides said of Wednesday’s discussion that “some initial views were exchanged”, but that “several questions and concerns arose” and stressed that as such, “we will need further clarifications in the coming days”. “The positive thing is that this time, everyone’s goal is the same: to find convergences so that the reform is as good as possible and protects the macroeconomic impact on the local economy and ensures the sustainability of the social insurance fund,” he said. Asked whether the question of how the reform will be financed was answered at Wednesday’s meeting, he said that it was not, and that instead, “it is one of the things we are waiting for to be clarified by the technocrats, so that we all know where the additional cost may come from”. Meanwhile, trade union Peo leader Sotiroula Charalambous said that according to the government’s current proposal, the number of years of social insurance contributions required for one to be able to take early retirement at 63 years of age will “gradually” rise from its current 33 to 38. She also said that the government’s current plans “do not address the issue of a widow’s pension for men [whose spouses died] before 2018”, saying that this is “problematic” and a “social injustice”. Nonetheless, she said that her union wishes to “study the issues of changes in disability pensions and widow’s pensions” foreseen by the reform. “Some changes have more positive signs, some more negative,” she added. To this end, she said that “even with the reform and after the increases [to pensions], by the government’s own admission, there will still be pensioners below the poverty line”. Fellow trade union Sek leader Andreas Matsas reiterated his own union’s reservations regarding the reduction in the downward adjustment of pension rates from 12 per cent to 7.5 per cent, saying that this figure should be reduced further. He also said that the government’s plans to submit the bills to parliament are “a bit dreadful”, given that all the stake-holding organisations “must raise the issue in their collective bodies”. “For us, the essence is to complete the process as efficiently as possible so that what will be submitted to parliament is as agreed upon as possible,” he said, before adding that “under certain conditions”, it may still be possible for the reform to be implemented by the beginning of next year. Labour Minister Marinos Mousiouttas had on Wednesday said that “of the 123,000 old-age pensioners around today, all are positively affected” by the reform, adding that around 50,000 pensioners will receive an increase in excess of €100 per month. Additionally, he said, future pensioners who earned low salaries during their working life may receive increases of up to 60 per cent compared to the current system. He said that the reform will “mean immediate income support for thousands of families at a time when the cost of living is putting more pressure on the elderly and houses with lower incomes”. “The most important social choice of the reform is to give the greatest support to [those on] the lowest pensions,” he added. Despite these increases, he said that the retirement age and employees’ social insurance contributions will not increase.