Finance Ministry acknowledges persistent financial pressure despite index rise

The Financial Wellbeing Index for Cyprus rose in 2025, but household financial pressure remains widespread, according to findings published by the Financial Wellbeing Institute and commented on by the Finance Ministry on Thursday.

The index reached 54.6 points in 2025, marking an increase of around four points compared with 2024, reflecting what the ministry described as a broad improvement across all 14 components of the index.

In a statement, the ministry said the results pointed to an overall strengthening of financial wellbeing, while acknowledging that significant challenges remain, particularly related to inflation, energy costs and retirement concerns.

The ministry added that the findings highlight ongoing difficulties faced by parts of the population due to the cost of living and external economic pressures, adding that anxiety over pensions remains a key concern for households.

What is more, the ministry pointed out that “the government has already implemented measures aimed at tackling inflation and supporting households“, including changes to tax policy intended to increase disposable income.

These measures include revised tax brackets, a higher tax-free threshold and additional tax reliefs for different categories of taxpayers, the ministry said.

It also referred to ongoing reforms of the pension system aimed at ensuring long-term sustainability and improved adequacy of retirement incomes, as well as strengthening public confidence in future pension provision.

The ministry further stated that improving financial literacy remains a priority, as better understanding of household finances is seen as essential to building a stronger culture of savings.

The Financial Wellbeing Index, presented by Financial Wellbeing Institute president Panayiotis C. Andreou, showed that despite improvements, a significant share of the population continues to face financial strain.

The research found that 38.4 per cent of Cypriots remain in the two lowest categories of financial wellbeing.

These categories include 15.4 per cent classified as financially vulnerable and 23.0 per cent described as financially struggling.

At the other end of the scale, 27.7 per cent are financially adequate, 20.8 per cent financially secure, while only 13.1 per cent are considered financially thriving.

The study shows that financial stress remains the weakest component of the index, scoring 48.8 points, below the 50-point threshold.

Nearly 49.5 per cent of respondents said financial issues cause stress and anxiety, while 45.1 per cent reported difficulties in making ends meet.

Retirement remains one of the most significant concerns, with almost half of respondents doubting they will maintain their current living standards after leaving the workforce.

Participants estimated that their state pension would replace 52.3 per cent of their final salary, while the actual replacement rate is closer to 42 per cent, according to Social Insurance Fund data.

The survey also found that 26.1 per cent of respondents identified rising living costs as the main threat to financial stability.