Cyprus Mail
Cyprus

Conference highlights need for reforming pension system

Low birth rate and increased life expectancy have led the government to include pension reform on its agenda, Labour Minister Zeta Emilianidou said on Tuesday.

In a speech read out by director of the labour department Alexandros Aklexandrou at a conference organised by the Federation of Employers and Industrialists (Oev) she said a series of measures were introduced in 2009, while additional measures were imposed by the Troika in December 2012 to ensure the viability of the Social Insurance Fund.

The minister the government is adopting proposals to provide incentives for people to work for longer to ensure the adequacy of pensions.

She also said that the time has come to examine the modernisation of the legal framework and the strengthening of the second pension pillar. Recently, she noted, the cabinet has authorised the ministers of finance and labour to hold a dialogue with stakeholders on reforming pension funds and strengthening their supervision.

Oev President Christos Michaelides reiterated that the increase in life expectancy, declining birth rates, economic conditions, the institutional framework and other factors influence the future and efficiency of the pension system.

He emphasised the need for a fruitful dialogue for the entire system, covering not only the sustainability and adequacy of the Social Insurance Fund, but also the management of provident and pension funds, the performance of pension plans, their financial planning and especially the role of the private sector in ensuring adequate pensions.

The government intends to promote a comprehensive and integrated reform of the pension system in Cyprus, according to the head of the Department of Economic Research at the Ministry of Finance Yiorgos Panteli.

Besides pension plans of the public sector, he said it is imperative that the general framework for the provision of pensions is reformed in line with international best practices to guarantee citizens’ income in old age.

He noted that there are significant weaknesses and challenges in the general framework of the pension system in Cyprus and that taking additional structural measures is a must.

Panteli highlighted the need to upgrade the supervision of occupational pension funds and pension funds offered by insurance companies. He also said that the existence of a large number of very small provident funds is an obstacle to achieving economies of scale and raises the costs for the parties involved.

The government’s primary objective, he said, is strengthening the second and third pension pillars that cover occupational and private pension funds, to provide citizens with additional retirement benefits that will adequately cover their needs.

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