The government on Friday rejected a suggestion by Akel-affiliated trade union PEO to remove a 12 per cent penalty from pensions of people who retire early, saying it would render the social insurance fund unviable.
In a statement responding to a news conference held by PEO, Labour Minister Zeta Emilianidou said the demand to scrap the actuarial adjustment for early retirement was in reality “a demand to reduce the retirement age from 65 to 63 for the entire population.”
Emilianidou said the adjustment PEO wants scrapped today, had been passed by the Akel administration in 2012 for specific reasons.
The minister said the adjustment was wrongly referred to as a 12 per cent penalty on pensions because it was an adjustment depending on the time a person decided to collect their pension between 63 and 68.
“Since the age of normal retirement has been set by the Akel government in 2012 as 65, legal provisions have been included so that for each month someone opts to collect their pension earlier, the pension is reduced by 0.5 per cent,” the minister said.
The adjustment was enforced by the Akel administration in 2012, which also added provisions so that from 2023, the retirement age would rise by six months each year to gradually reach 67.
Emilianidou said these were the facts and anyone who suggests scrapping the actuarial adjustment and consequently the reduction of the retirement age for the entire population, Akel and PEO that is, must answer two questions: “when Akel was government in 2011-2012, what were the reasons for the decision to draft and implement the legal provisions they are suggesting we scrap today? When was it wrong, 2012 or today? When Akel and PEO had decided to gradually raise the retirement age to 67, were they wrong in 2012 or today?”
Citing studies, the minister said the social insurance fund would not be viable and would collapse if along with the rise in life expectancy the retirement age was reduced instead of the other way round.
“How will their proposal to reduce the retirement age at a cost of hundreds of millions of euros per year be funded?” Emilianidou said.
PEO and other, mainly leftist organisations, said Friday they were holding a protest on April 17 to demand scrapping the adjustment.
The organisations said they considered the measure unfair.
“This measure is one of the antidemocratic measures imposed by the troika (of international lenders) on Cypriot society amid the well-known conditions of the banking crisis, citing the possibility of the state being unable to meet its obligations towards the fund and the supposed danger of social insurance collapse,” PEO said.
The union claimed the last actuarial study showed that the social insurance fund continued to be robust and viable in the long term.