Pension reform: three off-limits issues now back on the table

Economy pensionerspensionsTop News Pension reform: three off-limits issues now back on the table Keravnos Syntakseis 1536x1152 Relevant News Ayia Napa house fire damages storage shed and parked car 8 September 2026 Pension reform: three off-limits issues now back on the table 8 September 2026 DISY set to push presidential succession decision into October 8 September 2026 Angelos Angelodimou 8 September 2026 FacebookXWhatsAppEmailPrintViber Three parameters that all sides had agreed would stay off the table when Cyprus’s pension reform effort began are now in doubt, following Monday’s negotiating session. The dialogue has grown more difficult, and with the government’s tight timeline, tabling the bill in parliament by the end of this month and implementing the reform on January 1, 2027, every session now carries added weight. Social partners are also raising the prospect of a five-year reform cycle, since several of today’s figures are expected to change after 2032. Taking it from the start: when the reform process began, all sides agreed that the retirement age limit, the level of contributions and the sustainability of the Social Insurance Fund would not be up for discussion. That held until the government’s bill was tabled towards the end of August. It emerged that the bill included a provision for a new actuarial study five years after the reform takes effect, and that a contribution increase would be one option examined if the study found a sustainability problem. That single provision put two of the three agreed parameters back in question: the Fund’s sustainability and the possible rise in contributions. The three points According to philenews sources, both the Actuary and the Finance Ministry team told social partners earlier that week that, based on their own calculations, a contribution increase was unlikely, but that the provision had been included in the bill as a precaution. Social partners are not convinced, and do not share the government’s optimism. Sources say the assumptions behind the government’s case for avoiding a contribution increase were judged overly optimistic. The government’s case rests on three points. The Social Insurance Fund’s investment policy is expected to produce a return of around 3.24%. The crackdown on undeclared and illegal work is expected to succeed, boosting the Fund’s income from additional contributions. And the Fund’s real reserve, currently just 1%, is expected to be strengthened through investment returns and the government’s repayment of its loan to the Fund. Social partners say that under these scenarios, “the numbers don’t add up.” With that concern in mind, and given the possibility that contributions may need to rise after five years, OEV said on Monday that the retirement age should also be examined, not just contributions. The loan instalments Two further points are worth noting. First, the government’s analysis of repayments on its roughly 12-billion-euro loan to the Fund assumes average real GDP growth of around 2%, average inflation of 2%, an average market borrowing rate of 3.5%, and an average return on new investments of 3.5-5%, over a forecast horizon running from 2026 to 2060. If those conditions turn out worse than assumed, loan repayments would be frozen. Second, this potential increase should not be confused with a separate, automatic contribution increase every five years, which Finance Minister Makis Keravnos referred to in recent days. That mechanism dates to 2012, when three measures were agreed with the Troika to preserve the Fund’s sustainability: a 12% penalty for retiring at 63, linking the retirement age to life expectancy, and automatic five-yearly contribution increases running until 2039. That mechanism is already in force and is separate from the potential increase now under discussion, which would depend on the actuarial study due in the 2030-31 period. Safeguarding sustainability On Monday’s session, Keravnos stressed that the main goal at this stage was to proceed with “pillar one,” with the government’s effort focused on raising pensions for low-income pensioners. He added that the wider picture must not be overlooked: for the reform to have real substance, it also needs to safeguard the sustainability of the economy and fiscal balance, both now and in future. He said he had briefed social partners on this aspect and heard their views, and that the reform should include safeguards for a crisis scenario. Labour Minister Marinos Moushouttas noted that the reform was designed to cover people left out of the tax reform, mainly pensioners, whose income fell below the then-threshold of 19,500 euros, with the aim of raising their income, as far as state finances allow, so they can live more comfortably. Retirement age increase OEV director-general Michalis Antoniou stressed that the bill given to social partners explicitly acknowledges the possibility of a contribution increase. He added that the bill, once passed into law, should also provide for a potential increase in the retirement age, not just contributions. He pointed out that both should be treated strictly as tools to be used only if the Fund’s sustainability were genuinely at risk. KEVE secretary-general Filokypros Rousounides pointed out that the retirement age question had already been discussed before the reform process began. He added that if a different scenario emerged from the final outcome, all the parameters would need to be reassessed, so as to protect both public finances and the Fund’s sustainability while keeping the reform socially fair. SEK deputy secretary-general Panikos Argyridis underlined that the union had repeatedly stressed that the reform should not extend the retirement age beyond the agreed legal framework, nor increase contributions beyond what had already been agreed under Social Insurance Fund legislation. He added that certain elements confirmed SEK’s concern that basic principles agreed at the start of the discussions were being altered. PEO secretary-general Sotiroula Charalambous underlined that there was no discussion of raising the retirement age or contributions. On the meeting itself, she said she had expected the Finance Minister to set out the reform’s financial framework, comparing what the state pays today with what it would pay in future. “We have said this before, we repeat it now,” she said, adding that if the figures were not made clear, the discussion would not be very productive. DEOK president Stelios Christodoulou said: “The reality is that today we are leaving more concerned than on previous occasions,” noting that they expect written clarifications from the Finance Minister. PASYDY deputy secretary-general Alexis Alekou said that although the two ministers had provided figures and data, gaps and concerns remained on all sides, and that they expect these gaps to be filled. 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