Government board proposes annual €800 pension increase for early retirees (Updated)

The labour advisory board proposed on Monday a reduction of the 12 per cent drop in pension payments for those who retire before the age of 65 if they have completed 40 years of contributions.

The proposal, they say, would positively impact a total of 10,000 pensioners who have taken early retirement since 2012, with all 10,000 set to receive an extra €800 per year.

In addition, the scrapping of the reduction would allow an extra 1,000 people per year to retire early while taking home a pension €800 higher than it otherwise would have been.

They said while it is not possible to scrap the reduction entirely, they believe the changes they are proposing “will positively affect the outcomes of many retirees within our current financial parameters”.

Speaking after the meeting, Labour Minister Yiannis Panayiotou said the government is “methodically and effectively managing” the matter “according to the needs of society and the potential of the economy”.

He added that he expects that within the coming days and weeks, stakeholders would submit their own proposals to his ministry surrounding how the matter can be taken forward.

To this end, he said the current proposal “is neither for approval nor rejection, it is a basis for discussion so that social dialogue can develop.”

He added that these proposals must fall within the parameters of the government’s funds and correspond with figures released by an earlier actuarial study into governmental spending on pensions.

Additionally, he said the labour advisory board would next meet towards the end of November or the beginning of December to develop proposals and dialogue on the matter.

He also said other matters such as the employment strategy for third-country nationals and the readjustment of the national minimum wage were also on the agenda.

Earlier, trade union Sek had rejected the proposal, saying the ministry is open to suggestions, provided that they do not increase costs affecting the viability of the social insurance fund.

In response, Panayiotou had warned that delays in implementing the changes would “maintain the existing situation without any change for any pensioner,” which, he said, would not meet the current needs of the affected pensioners.

Under the current system, people can retire at 63 if they have completed 33 years of social insurance contributions and covered the relevant points but receive 12 per cent less than if they had retired at 65, the official retirement age.