Pension cut scenario for high earners still on table, sources say

Economy pensionsTop Newstrade unions Pension cut scenario for high earners still on table, sources say Pension Cut Scenario For High Earners Still On Table, Sources Say Relevant News Pension cut scenario for high earners still on table, sources say 11 August 2026 Things to do on Tuesday, August 11 11 August 2026 Cyprus faces 40C heat on Tuesday as yellow warning in effect 11 August 2026 Angelos Angelodimou 11 August 2026 FacebookXWhatsAppEmailPrintViber Government talks on pension reform are at a critical stage just hours before the bill is due to be handed to social partners, but information gathered by Phileleftheros from multiple sides has raised serious concerns about the bill’s final form. According to Phileleftheros’s information, the scenario of cutting some pensions to fund increases for low pensions remains on the table. Specifically, one scenario still circulating in government corridors would revive actuaries’ earlier proposal to reduce the amount paid to high pension earners, in order to cover the planned increase for low pensioners. That scenario, put forward by actuaries some months ago, had been rejected by the President of the Republic himself, but appears to be returning through an indirect route, Phileleftheros’s sources say. The proposal appears to have also reached social partners, whose response is clear: do not even submit such a bill. According to Phileleftheros’s information, the formula the government is working on would apply to future pensioners rather than current ones. The thinking under consideration is to reduce, by a small percentage sufficient to cover the state’s losses, the pensions of those considered high earners. This would apply only to the earnings-related portion of pensions, not the basic portion, and would affect those at the top of insurable earnings. In other words, if the cut goes ahead, it would fall on private-sector pensioners, since public servants do not contribute to the Social Insurance Fund’s earnings-related component, in order to cover the cost of the low-pension increase. This raises two questions. First, who and how many in the private sector are actually considered high earners? Second, are those currently classed as low earners genuinely people who could not contribute more to the fund because they were low-paid, or does that group also include people who under-declared their real income and therefore now receive a low pension despite substantial assets? It is worth recalling that the pension-cut scenario was floated some months ago but was rejected following objections, both by the President of the Republic and subsequently by the Labour Minister, who attributed it to one of the actuaries’ scenarios. Despite government assurances that no such measure will emerge, Phileleftheros’s information from more than one source indicates the scenario is still in play, reportedly with specific percentages already under discussion. Borrowing and public debt Beyond the above, serious concern also surrounds two further points in the pension reform. The first concerns ending the practice of successive governments borrowing from the Social Insurance Fund’s surpluses, and the related gradual repayment of the resulting debt, currently estimated at 12 billion euros. On one hand, this is expected to gradually build up a significant reserve for the fund, which would need to be managed by a fully independent and highly qualified committee. On the other hand, the state automatically loses around one billion euros a year, roughly 800-900 million euros from foregone borrowing and 100 million euros from debt repayment. The fund’s surplus was around one billion euros in 2024 and close to 800 million euros in 2025. The state would need to find this money elsewhere, potentially through external borrowing, which, unlike the internal borrowing used until now, would count towards public debt. The second point concerns pillar two of the pension system, the provident funds. In comments to CyBC two days ago, the Labour Minister said the reform would proceed with the first pillar, while social partners would be given a roadmap for the second pillar setting out the government’s planned steps. However, social partners, and unions in particular, stress they will not simply accept the roadmap being submitted; an agreement on it will be needed. The coming days will be particularly critical for the final form the pension reform bill takes. Meetings of the Labour Advisory Body have been scheduled for August 19 and 28, where the government bill will be explained and analysed to social partners. 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