Low-income pensioners in Cyprus will see a combined increase of €237 once the government’s pension reform takes effect, Labour Minister Marinos Mousiouttas said on Thursday, disputing a lower figure that had been circulating publicly and adding that isolated numbers did not reflect the full picture.
The real benefit
Speaking after a meeting of the Labour Advisory Body, Mousiouttas set out a concrete example: an existing low-pension recipient who took the full basic pension early, at 63, currently receives €426 a month, down from €484 because of a 12% early-retirement penalty. Under the reform, that pension would rise to €620, a €194 increase, while the easing of the early-retirement penalty would add a further €43, not €23 as has been suggested. Combined, the two changes amount to a €237 increase for the pensioner.
“This is the real picture. If you isolate the numbers, you can say whatever you like. We’re telling the truth. We’re not hiding behind figures and we don’t want to mislead people,” Mousiouttas said.
123,000 pensioners set to benefit
Speaking separately at an event on the pension reform organised by the citizens’ group “55 Plus Minus Together – Cyprus,” Mousiouttas said the reform would bring increases for about 123,000 pensioners. More than 50,000 of them would receive increases of over €100 a month within five years, and more than 8,000 would see increases exceeding €200, with rises ranging from 5% to 55% depending on the case.
Under current planning, 60% of the total increase would reach pensioners within the first two years, split evenly between year one and year two. As an example, he said a pensioner with a full working life currently receiving €504 a month could see a total increase of about €250 by the end of the five-year period.
Three alternatives on the table
Mousiouttas said the ministry’s proposal, which gives greater weight to the basic pension and benefits low-income pensioners, would cost €36 million. He said three alternative proposals exist for this part of the reform, at the same cost.
One option would apply the reduction to the whole pension amount, both the basic and proportional parts, but at 2.5% instead of 4.5%. “This means low-income pensioners would be helped less,” he said.
A second option would apply the reduction only to existing pensioners, not to the roughly 40,000 people expected to retire over the next five years; in that case, the reduction to the basic pension would be 8-8.5% instead of 4.5%.
A third option would apply the reduction to the whole pension, cutting it to 4%, but again covering only existing pensioners.
Retirement age holds at 65
Mousiouttas said the retirement age remains at 65, but that those who wish may continue working and contributing until 67, in return for a correspondingly larger pension. “We give people a choice, we don’t impose an obligation,” he said.
Timeline unchanged
Mousiouttas repeated that the timeline for completing the reform stands: the legislation is due to be tabled in parliament by September 30, with the aim of the reform taking effect from January 1, 2027, so that pensioners see the difference in their pay from February 1, based on whichever proposal parliament adopts.
The ministry has until around October 10 to resolve outstanding questions and build consensus. Mousiouttas noted that discussions could continue even after the bills are tabled in parliament, up until the relevant parliamentary labour committee begins debating them.
Once the final figures and percentages are agreed, the social insurance authorities will need a significant period to adjust their systems accordingly. A timely agreement is therefore essential if the increases are to be paid out in early February as planned.
No rise in contributions planned for now
Asked about a possible increase in contributions, Mousiouttas repeated that the contribution rate to the Social Insurance Fund is not being raised. He said the ministry’s proposal is that, if an actuarial study in five years’ time shows an increase is needed to avoid cutting pensions or raising the retirement age, a discussion on higher contributions would follow, adding that no agreement has been reached on the issue so far.
