Pension reform to ensure system is viable for ’40 or 50 years’

The government’s planned reforms to the pension system will ensure that it remains viable for “40 or 50 years”, Labour Minister Marinos Mousiouttas said on Wednesday, as he addressed members of Akel. “The reform means that pensions will be increased, with priority given to low-income pensioners, where the need is most pressing. All pensioners will see their pensions increase, some by more, some by less, depending on the specifics of each case, such as one’s years of contributions and amount of contributions,” he said. He added that “more than 50,000” people will receive an increase in their pension of more than €100 per month, while “almost 10,000” will receive an increase of more than €200 per month, but stressed that despite this, neither the statutory retirement age nor workers’ social insurance contributions will increase. “The retirement age is not increasing, and nor are contributions, and the fund is being shielded so that it remains viable for 40 or 50 years, because a pension must be secured for our children and grandchildren,” he said. He then stressed that the reform will be implemented on January 1, and that at the end of the same month, “the difference will be visible, not in announcements, but in pensioners’ bank accounts”. One of the government’s plans, he said, is to ensure that all pensioners whose pension currently amounts to €600 per month or less will receive an increase of at least €30 per month. Another, he said, is that “for the first time, periods spent outside of paid employment, such as time spent raising children, caring for our own people, periods of disability, and the time before one entered the labour market, are also counted in the pension”. He said that this plan will ensure that “the gender gap in pensions … begins to close”. Reform will cost €800m over first six years of implementation Regarding the downward adjustment of pension rates for people who take early retirement, which is currently set at 12 per cent, he said that the issue has become a “source of bitterness”, and that the government plans to reduce it to 7.5 per cent. Earlier this week, he had said the plans would cost the state more than €800 million in the first six years after they are implemented. “The additional burden is estimated at €486 million for the state, plus €334 million for the social insurance fund, therefore €820 million total over six years,” he said, before adding that the first bill will be put before parliament by October 8 at the latest. Despite his assurances, however, some trade unions remain unconvinced by the reform plans, with Peo leader Sotiroula Charalambous having warned last month that the reforms may leave some pensioners below the poverty line. She said that the poverty line in Cyprus at present is €1,018 per month, and that the government’s current plans would see pensioners earning a minimum of €900 when their pension is combined with other benefits and allowances to which they are entitled. She did note that this figure is an increase from the current minimum of €794 per month, but stressed that “even with the reform, there will continue to be pensioners whose total income will be below the poverty line”. Away from the matter of the poverty line, she said her union is “dissatisfied” with the fact that the government only intends to reduce the downward adjustment of pension rates for people who take early retirement from 12 per cent to 7.5 per cent. “We are ready to discuss the issue constructively, with the main issue being that any relief must include an entire and not a partial reduction,” she said.