Cyprus Mail
Cyprus

Opposition MPs drop bill to scrap ‘penalty’ on early retirement

Opposition MPs said Tuesday they will drop legislative proposals aiming to scrap a so-called ‘penalty’ on early retirement because the bills would inevitably be deemed unconstitutional and never pass anyway.

Regardless, they urged the government to reconsider either lowering or altogether abolishing the 12 per cent downward adjustment to pensions applying to those who retire early at the age of 63.

The statutory retirement age in Cyprus is currently 65.

Chair of the House labour committee Andreas Fakondis (Akel) said lawmakers decided to withdraw legislative proposals tabled on the matter. There was no point pursuing them at this stage, as doubtless the president would refuse to sign off on the bills and return them to parliament or refer them to the supreme court.

But he called on the government to heed the demands voiced by trade unions who want the ‘penalty’ scrapped.

Doing away with the ‘penalty’ would not unduly burden the social insurance fund, he argued.

“The viability of the social insurance fund is guaranteed until the year 2080. The latest actuarial study done, demonstrates it.”

Fakondis said abolishing the 12 per cent downward adjustment would help raise pensioners’ living standard as well as encourage early retirement – as currently the penalty acts as a disincentive to retirement – and create new jobs.

The MP appealed to the government to bring legislation to get rid of the 12 per cent penalty.

Earlier in the month, 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”.

The minister had 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 67. Since the age of normal retirement has been set by the 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, she said.

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