Cyprus pension reform aims to increase benefits and ensure fund sustainability

The Cypriot government is advancing a major pension reform aimed at increasing benefits, particularly for low-income retirees, while ensuring the long-term sustainability of the Social Insurance Fund. Minister of Labour and Social Insurance Marinos Mosiouttas stated that a bill for the first pillar will be submitted to the House of Representatives in September.

A key component of the reform involves reducing the proportional reduction (penalty) for early retirement. The proposal seeks to decrease this reduction from 12% to 7.5% for the basic part of the pension, which could result in an average increase of approximately 6% for roughly 40,000 affected retirees. To achieve this, the requirement for early retirement eligibility will increase from 33 to 38 years of service.

Government spokesperson Konstantinos Leftermiotes noted that an intensive social dialogue is underway. While the primary goal is to provide higher pensions and support vulnerable groups, the Minister cautioned that if the fund's sustainability is threatened, future increases in social contributions might be necessary to prevent any reduction in pension levels.