Pension reform: Thursday is the day for the 12% penalty, here’s what to expect

Economy pensionerspensionsTop News Pension reform: Thursday is the day for the 12% penalty, here’s what to expect Pension Reform Thursday Is The Day For The 12% Penalty, Here's What To Expect Relevant News Pension reform: Thursday is the day for the 12% penalty, here’s what to expect 1 September 2026 CY-Alert: why Saturday’s warning came after the storms began, and what to do if yours didn’t sound 1 September 2026 KEO to build €25m spirits and juice plant in Kato Polemidia, Limassol 1 September 2026 Angelos Angelodimou 1 September 2026 FacebookXWhatsAppEmailPrintViber Labour Minister Marinos Moushouttas will tackle the long-running 12% pension penalty issue on Thursday, working with an actuary and the Finance Ministry’s team, in a session expected to dominate the entire meeting of the Labour Advisory Body given its pivotal role in advancing reform talks. Costing the proposals Moushouttas is expected to present costing data on Thursday for the unions’ proposals on the 12% penalty, according to information gathered. The unions’ proposals date back to the tenure of former Labour Minister Yiannis Panayiotou, who put forward two proposals on the issue during 2024-25, neither of which was accepted. Unions were then asked to submit their own. When Moushouttas tabled the government’s proposal, unions reminded him that their own proposals remained on the table, unused and still not costed. He is expected to provide that costing data on Thursday, with the caveat that if the unions’ proposals prove more costly than the government’s, cuts will need to be made elsewhere to keep the budget balanced. Monday’s session of the Labour Advisory Body focused on Pillar 0, covering mainly low-income pensioners, and lasted around one to one and a half hours, consisting largely of questions and clarifications sought by social partners. The next session is scheduled for Thursday, followed by further sessions on September 7, 10 and 17. Meanwhile, the Technical Committee discussing Pillar 2, covering Provident Funds, continues meeting today, September 1, with its next session set for September 15. €500 million over six years In televised comments on Alpha on Monday, Moushouttas addressed the reform’s much-discussed cost. Following calculations by the Finance Ministry, he said the reform is expected to cost €500 million over six years, or around €75 million annually, adding that the government’s proposal is based on actuarial studies that took into account the sustainability of both the Social Insurance Fund and public finances, so as not to disrupt the economy’s indicators. On how the resulting pension increases will be distributed, Moushouttas said the government favours phasing them in as follows: 30 per cent in the first year, 30 per cent in the second, 10 per cent in the third, 10 per cent in the fourth and 20 per cent in the fifth. On the Low-Income Pensioner Support Allowance, he said 40-45 per cent of pensioners will receive an increase of at least €100, while around 8,000 people will see increases exceeding €250 over five years, not including the effect of the Cost of Living Allowance. Possible future contribution increase Moushouttas also addressed the possibility of a future increase in contributions. He recalled that the original proposal for a 5 per cent cut to high pensions had been rejected on constitutional grounds. As a result, he said a new actuarial study would be carried out in 2031-2032 to assess the Fund’s sustainability under the new framework. “We guarantee that pensions will be what we say,” he said, adding that if any problem arose, the contributions element would need to be examined. He said he was optimistic that convergence could be reached through dialogue. Read more: Labour Ministry, social partners to meet twice weekly on pensions Subscribe to our Newsletter Latest News CY-Alert: why Saturday’s warning came after the storms began, and what to do if yours didn’t sound KEO to build €25m spirits and juice plant in Kato Polemidia, Limassol “It’s taking on a lot of water”: passengers warned in May, video from sank Kyrenia ship shows Investigators hunt motive, masterminds in dark web murder plot in Cyprus Three authorities investigate Cape Greco tragedy involving Mavropoulos’s boat, “Petsas I” Kyrenia shipwreck: black box search continues as first funeral held, 20 still missing Man, 21, stabbed in Nicosia as police probe murder attempt Follow en.philenews on Google News and be the first to know all the news about Cyprus and the world.