Pension reform in Cyprus to cost more than €50 million annually — Cyprus Mail
The planned pension reform in Cyprus will require “significantly more” than €50 million in annual fiscal expenditure. Labour Minister Marinos Mousiouttas said this after a meeting of the labour advisory council, Cyprus Mail reports.
The minister did not name a final amount. According to him, the government plans to submit reform bills to parliament by September 30. The new rules are intended to be introduced from January 1, 2027, so that people feel the changes from February 1. Discussions in the advisory council are to continue until October 10.
Planned pension increases
According to Mousiouttas, the reform provides for pension increases for approximately 123,000 pensioners. More than 50,000 people may receive over €100 extra per month, while more than 8,000 may receive an increase of €200. Overall, the changes are to be implemented over a five-year period.
Depending on the individual case, the increase will range from 5% to 55%, the minister said. Pensioners who are currently insured by the Social Insurance Fund and receive a pension of up to €600 are to be guaranteed a minimum increase of €30 per month.
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The full amount of the increase will be paid in 2027–2031. In the first two years, recipients will receive up to 60% of the total increase.
Pension calculation and insurance fund
One of the key changes is to be a new procedure for calculating the basic pension. It will depend on the total duration of a person's registration and insurance. Contributions subsidised by the state for periods previously considered gaps by the system will also be taken into account.
The statutory retirement age will remain 65, while people will be able to continue working until 67. There are no plans to increase the contribution rate to the Social Insurance Fund. The reduction for early retirement is intended to be cut from 12% to about 7.5%, but not abolished entirely.
The state also plans to end the practice of borrowing from the Social Insurance Fund. Annual surpluses are to be directed to an investment fund, while the state debt to the fund, estimated at around €12 billion, is to be gradually repaid over 40 years.
