**Pension Reform to Bring Increases for All Retirees, Minister Says**
The Cypriot government is set to implement a comprehensive pension reform that aims to increase benefits for all retirees, with a particular focus on those receiving lower pensions. Labour Minister Marinos Mousiouttas announced the details of the reform during interviews with local newspapers Phileleftheros and Kathimerini on Sunday. This initiative marks the first significant overhaul of the pension system since 1980.
Mousiouttas emphasized that the reform is designed to establish a fairer, more modern, and sustainable pension framework. He stated that pension increases will be determined based on several factors, including the number of years worked and the contributions made to the social insurance fund. Notably, the reform will direct proportionally greater support to those on lower pensions, ensuring that the most vulnerable retirees receive the most assistance.
According to the Labour Minister, over 51,000 of the 123,212 current pensioners are expected to see increases exceeding €100 per month. The increases will be phased in gradually over a five-year period. For pensioners currently receiving up to €600, a minimum increase of €30 will be implemented from the first month the reform takes effect.
Mousiouttas provided an example to illustrate the potential benefits of the reform. He mentioned that a retiree with a full working history currently receiving a pension of €504 could see their monthly pension rise by approximately €250 over the five-year implementation period. However, he noted that for those receiving the low-income pensioner allowance, there may be a decrease in that allowance as their pension increases. Nonetheless, he assured that their total income would not fall below current levels.
While the pension reform aims to enhance the financial well-being of retirees, Mousiouttas acknowledged that it alone would not eliminate poverty among pensioners. He stated that addressing poverty requires more than just adjustments to social insurance pensions, which is why the targeted low-income pensioner allowance will continue for eligible recipients.
The reform also addresses the actuarial reduction currently applied to individuals who retire at the age of 63. Mousiouttas explained that while the full 12 percent reduction cannot be entirely removed without jeopardizing the sustainability of the fund, the government proposes to reduce this penalty to 7.5 percent for the basic component of the pension.
Additionally, the reform includes provisions for individuals who have taken time off work due to caregiving responsibilities or other circumstances. The state will cover social contributions equivalent to three years for mothers who stop working to care for their children. Moreover, individuals with disabilities and informal caregivers will receive credited contributions throughout their lives, while students and new entrants to the labor market will also be granted credits for one year.
Changes are also planned for the calculation of pensions for widows and widowers. Mousiouttas indicated that extending widowers’ pensions to approximately 4,300 men who lost their spouses before January 1, 2018, would incur significant annual costs, which will need to be funded appropriately.
On the financial front, Mousiouttas stated that the social insurance fund reserves will no longer be lent to the state but will instead be placed in an investment account. The government has also committed to repaying its existing debts to the fund over time, ensuring that the fund's sustainability is not compromised. The minister reassured that the fund would not adopt an aggressive investment strategy.
Earlier this year, fiscal council chairman Andreas Charalambous urged the government to exercise caution in its plans to invest the social insurance fund’s cash reserves, emphasizing the need to avoid risky ventures that could threaten the fund’s stability.
In addition to pension reforms, Mousiouttas addressed the employment of third-country nationals, acknowledging their necessity due to high employment levels and labor shortages in Cyprus. He affirmed that the government would not tolerate the abuse or exploitation of foreign workers and announced that inspections would be intensified, particularly in sectors such as construction, tourism, and hospitality.
Mousiouttas expressed openness to constructive proposals regarding the pension reform, provided they align with the reform's core principles and that any additional costs are matched by equivalent savings.
The government aims for the pension increases to take effect starting January 1, 2027, marking a significant milestone for retirees in Cyprus. As discussions continue, stakeholders are keenly observing the developments surrounding this pivotal reform.