Cyprus will set up a new single independent insurance and pensions fund supervisory authority joining the separate authorities currently supervising the sectors, Finance Minister Harris Georgiades announced on Thursday.
The announcement was made during a joint press conference with the President of European Insurance and Occupational Pensions (EIOPA) Authority Gabriel Bernardino, who backed the government’s proposal.
“I am really encouraged of the announcement the Minister made today, I strongly supported it,” Bernandino said, adding that the proposal is clearly in line with EIOPA ’s recommendations.
“I think this is the right moment to do it, (the proposal) it would create an independent, stronger and credible supervisory authority. That is of course very important not only for the protection of the citizens in the areas of insurance and pensions but also an authority that can be efficient in delivering for the market to improve the growth capabilities and innovation in the insurance and pension markets,” he said.
In his remarks, Georgiades said Cyprus’ insurance and pensions sector may be quite developed but “there are weaknesses which we must acknowledge and deal with and there is room for drastic improvement with ample benefits for the Cypriot economy,” he said, adding that the new supervisory authority will address the issue of fragmentation currently observed in the sector.
“It is inconceivable to have more than 1,399 provident funds in Cyprus while much larger economies have some tenths of funds which are more strong, well-staffed and professional in their operation and management,” he said.
He made clear the reforms will not affect benefits or rights but he noted that “a quite serious issue is that many citizens reach retirement age after a life-long work with an inadequate pension, perhaps covered only by the social insurance fund.”
“No system can rely solely on social insurance, it is necessary the working population to participate to professional pension systems, provident funds, that operate properly and are properly supervised, constituting basic pillars for economic growth and social policy,” he said.
The finance minister said the proposal will be put into public consultation to secure consensus by all stakeholders and political parties.
The new authority will replace the Commissioner for Occupational Pension Funds, under the Ministry of Labour and the head of the Insurance Control Service of the Finance Ministry into a new single independent supervisory authority which will operate on the model of the Cyprus Securities and Exchange Commission.