Nicosia: The pension reform bill presented on Wednesday to the social partners includes proposals for an increase in pensions for all 123,000 old-age pensioners and a reduction of the 12% penalty for early retirement at the age of 63, Minister of Labor and Social Insurance Marinos Moushouttas has said.
According to Cyprus News Agency, in statements after presenting the bill and the government's proposal for the pension reform to the Labour Advisory Board, the Minister emphasized that all 123,000 old-age pensioners will benefit from the changes. Around 50,000 pensioners will see an increase of over 100 euros per month, while approximately 60,000 will receive an increase of less than 100 euros per month over a five-year period. The reform aims to provide immediate income support for families, particularly as the cost of living rises, impacting the elderly and households with lower incomes.
The Minister highlighted that future pensioners with low earnings might experience increases of 5% to 60% compared to the existing system. Regarding the 12% reduction for early retirement, the proposal suggests lowering the actuarial adjustment to 7.5% in the basic pension part. The discussion will continue at the next meeting on August 28, with the goal of implementing the reform by January 1, 2027.
The reform has been in discussion for about two years, and the effort is intensifying to achieve a positive outcome with widespread consensus. The bill will be presented to the Council of Ministers and the House of Representatives to ensure that people notice the difference by February 1, when they receive the first bank transfer based on the reform. The Minister noted that the reform revolves around three key principles: justice, adequacy, and sustainability, supporting those most in need, increasing pension income, and protecting the fund for future generations.
Chief Actuary Costas Stavrakis mentioned that public finances would bear a burden of 50 million euros each year for the first five years. However, studies predict a surplus over the next 40 years. The surplus will be managed through a governance mechanism for investment purposes. Stavrakis stressed the importance of proper governance based on international standards to ensure better returns and further improvements in benefits.
Social partners expressed the need to study the bill in depth to understand its implications fully.