**Pension Increases to Be Phased in Over Five Years**
The government of Cyprus is set to implement a series of pension increases over the next five years, with Labour Minister Marinos Mousiouttas announcing that 60 percent of the planned increases could be realized within the first two years. This phased approach aims to ensure the sustainability of the social insurance fund while addressing the financial needs of pensioners.
In an interview published by the Cyprus News Agency, Mousiouttas outlined the government's ambitious plan, which could see 30 percent of the pension increase introduced in the first year and another 30 percent in the second year. The remaining increases would be distributed as follows: 10 percent in both the third and fourth years, and the final 20 percent in the fifth year. While this scenario is currently under consideration, Mousiouttas noted that discussions are ongoing regarding the potential for a shorter implementation timeline.
The Labour Minister emphasized that the full increase could not be introduced in the first year due to concerns about the social insurance fund's sustainability and its impact on broader economic indicators. He cautioned that any additional demands on the fund could have significant repercussions for the economy, necessitating a gradual implementation of the pension increases.
Importantly, the gradual increases will not affect the immediate disbursement of the “small cheque” benefit for low-income pensioners. Mousiouttas mentioned that discussions regarding this benefit would continue with a technical committee and the Labour Advisory Body, with the goal of reaching a consensus by mid-October. The first bill related to the pension reforms is expected to be submitted to parliament in September.
The proposed pension reforms are designed to benefit around 50,000 pensioners who are expected to receive increases of more than €100 per month, while up to 8,000 low-income pensioners may see increases exceeding €200. The reforms are particularly aimed at assisting low-income retirees by placing greater emphasis on the basic pension and the number of years worked.
As the pension increases are implemented, the need for the “small cheque” benefit is anticipated to decrease. Mousiouttas assured that no pensioner would receive less than their current pension amount. Additionally, changes are planned for the housewife’s pension, with beneficiaries expected to join the social insurance fund over the next five years. The increases for this group will be calculated using a similar formula to that applied to low-income pensioners.
Other benefits will continue to be provided, including support for parents unable to work due to caregiving responsibilities and for individuals with disabilities who cannot engage in employment. The social insurance fund is expected to be bolstered by new contributions from individuals who have not previously had a social insurance account, particularly those relying on rental income or other sources.
Mousiouttas also announced the government's intention to establish a new investment fund for social insurance by January 1, 2028. This fund will receive overdue contributions from the state, amounting to €12 million plus interest, in addition to future surpluses. The finance ministry is preparing to commission a study for the fund from a specialized international agency.
In conclusion, the reforms are projected to ensure the sustainability of the social insurance fund for the next 40 years while providing incentives for individuals to remain employed, thereby reducing early retirement rates. The government remains open to suggestions regarding the reforms, provided that they do not compromise the integrity of the social insurance fund.