Government plans halt to penalty for early retirement

A government proposal to stop a 12 per cent deduction for early retirement will be prepared, after a study is completed at the end of September at the labour ministry, Minister Yiannis Panayiotou said on Tuesday, presenting the work done in the first six months since he has taken the helm.

As it stands, the statutory retirement age in Cyprus is 65, but there is also the option for retiring early at 63 with a consequent 12 per cent deduction in their monthly pension – a long-standing point of contention for unions and workers’ groups.

Since 1993 people who had made social insurance contributions for 33 years could retire at 63, but Panayiotou explained that the reduction was established in 2012 as part of the then-government’s negotiations with the Troika to ensure early retirement would not affect the social insurance fund.

Back in July, Panayiotou said the time and duration of retirees’ contributions to the social insurance fund would be considered as a “central parameter” determining whether people take standard retirement at 65 or early retirement at 63.

He added that he found it “interesting” that a significant number of workers, even with the existing retirement adjustment, elect to take early retirement at 63.

Meanwhile, presenting the work of the ministry, Panayiotou pledged that the ministry will deposit people’s pensions within a month of them applying for one, instead of the five to six months it currently takes to evaluate.

The minister said that within 2023 all workers who apply for retirement will start receiving their pension in the month immediately following the completion of the retirement age limit.

“From the end of September 2023, workers who retire at the age of 65 (and make up 30 per cent of pensioners) will start receiving a pension one month after turning 65. From the end of December 2023, workers who retire at the age of 63 (and make up 70 per cent of pensioners) will start receiving a pension one month after turning 63,” he said.

According to the minister, speeding up the procedures will benefit hundreds of pensioners within the next few weeks, benefiting around 10,000 pensioners annually, so that no citizen is left without an income in retirement.

Applications submitted for the payment of a statutory pension in 2021 reached 10,257, in 2022 they reached 11,425, and in 2023 a total of 7,861 applications have been submitted to date, while in 2022 the average examination time varied between five and six months.

The minister added that the computerised system of the Social Insurance Service has been technologically upgraded so that the existing information that is available internally is automatically used to calculate the amount of pensions, with the result that the timely payment of the first payment is possible.