Pension reform proposal to be finalised by August 5, minister says

The government’s final proposal for pension reform is expected to be decided by August 5, after Labour Minister Marinos Mousiouttas meets Finance Minister Makis Keravnos, the labour minister said on Sunday. Mousiouttas said the draft bill would then be discussed with President Nikos Christodoulides before being released for public consultation. The government is aiming to submit the legislation to parliament when it reconvenes in late September, with the reforms due to come into force on January 1, 2027. The minister said the draft would be presented to trade unions, employers’ organisations and other social partners before consultations are extended to political parties. Related Articles • Cyprus government policies are mean and unfair • Pensioners to see higher incomes in early 2027 • Cyprus households face affordability crisis • Govt delays pension reform bill to allow further dialogue • Cyprus pension system faces demographic pressures, says CBC • Our View: Pension reform must not be held hostage to populism “The bill will be given to the social partners and put out for public consultation,” he said, adding that the government’s actuary and technical team would also take part in discussions to explain the proposals and consider suggestions. Mousiouttas said the formal dialogue would take place through the Labour Advisory Board, with the aim of narrowing differences between unions and employers before the legislation reaches parliament. He expressed confidence that the government would be able to secure broad consensus, despite disagreements over some aspects of the reforms. Among the proposed changes are measures intended to improve pensions for groups that face greater barriers to full-time employment, including parents who leave the workforce to care for children, people with disabilities, informal carers and graduates entering the labour market. The minister said the state would provide subsidised insurance credits to these groups, allowing them to build additional pension entitlements that would increase their retirement income. Mousiouttas also confirmed that discussions are continuing over the 12 per cent actuarial reduction applied to pensions for people who choose to retire at the age of 63. He said the reduction was introduced following the 2012 financial crisis as part of the then-government’s negotiations with international lenders to ensure early retirement would not affect the social insurance fund. The minister clarified and insisted the government had no intention of lowering the statutory retirement age from 65 to 63. Instead, he said, the reform aims to reduce the impact of the 12 per cent penalty while maintaining the current retirement age. Back in 2022 the administration of Nicos Anastasiades had floated the idea of abolishing the offset once a retiree reaches the age of 81. According to mathematical formulas, in order that those retiring at 63 ‘lose out’ – in the form of pension payouts – compared to those retiring at the age of 65, they would have to live beyond the age of 81. At the time, life expectancy in Cyprus for men was calculated at 80.5 years, and at 84.5 years for women. The minister said the final figures and detailed provisions would be published when the draft legislation is released. He acknowledged that trade unions have raised concerns over three main issues within the state pension system: the 12 per cent reduction for early retirement, widowers’ pensions for cases before 2018, and overall pension levels. He added that a separate issue concerns the second pillar of the pension system, covering provident funds, with trade unions seeking a parallel agreement on those arrangements. While the government supports efforts to reach such an agreement, Mousiouttas said any delay in negotiations over provident funds “should not hold up the first pillar pension reform bill,” “I am optimistic,” he said. “It will not be easy, but I believe we can overcome our differences.”