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Our View: Calls for end to early retirement penalty are irresponsible

Labour minister Zeta Emilianidou

Being in opposition and having nothing tangible to offer voters ahead of the parliamentary elections, Akel decided to campaign for what could have appeal across party lines – the lowering of the retirement age even though it does not refer to it as such.

Instead, it has been demanding the scrapping of the 12 per cent penalty imposed on people who retire two years earlier, aged 63. Such individuals receive a pension from the state social insurance fund that is 12 per cent lower. If there was no penalty everyone would retire at 63 instead of 65 as they would be guaranteed a full pension.

As labour minister Zeta Emilianidou correctly pointed out, this was “a demand to lower the retirement age from 65 to 63 for the entire population.” She also explained that there was no 12 per cent penalty as such, but that for each month someone decided to take a pension earlier, 0.5 per cent was deducted. Emilianidou also recalled that the pushing back of the retirement age was passed by the Akel administration in 2012.

Akel finds nothing wrong in campaigning for a change of the retirement law it had amended in 2012, during the Christofias administration. The change was the correct decision, ensuring the social insurance fund would remain viable in the foreseeable future and in line with changing social conditions.

The average life expectancy had risen steadily in the last few decades and the only way to ensure the viability of pension funds was to raise the retirement age. In most EU member states the average is 65, while for several it will increase to 67 before the end of the decade. The same will happen in Cyprus according to the law passed by Akel. From 2023 the retirement age would increase by six months every year until it reaches 67.

Everyone knows that with people living longer the only way to ensure the viability of state pension funds is by raising the retirement age. The alternative would be to increase the monthly contribution of workers and employers to the fund, which might also have to be done at some point in the not too distant future.

For now, there is no such need and Akel will do the country a big service if it gives up this irresponsible populist demand which is unjustifiable and has no other purpose than to win the party a few thousand votes. Are these votes really worth threatening the viability of the state pension fund?

 

 

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