The bill to reform Cyprus’ pension system is to enter its final drafting stage next week after Labour Minister Marinos Mousiouttas meets Finance Minister Makis Keravnos next Wednesday to settle the remaining financial aspects before the bill is released for public consultation.

On Thursday, Mousiouttas said the draft bill should be completed by the end of next week, after which it will be presented to trade unions, employers’ organisations and political parties before reaching the House.

The government is aiming to submit the bill when MPs return from their summer recess in September, with the first phase of the reforms due to take effect on January 1 of next year.

Mousiouttas said discussions with the finance ministry would determine the final framework, after which the proposals would also be presented to President Nikos Christodoulides.

Once the bill is finalised, it will be circulated to trade unions and employers’ organisations for initial consultation before being opened to the public.

Mousiouttas said he would also meet parliamentary parties, accompanied by the government’s actuary, to explain the proposals in detail before debate begins in the House.

The reforms focus initially on the first pillar of the pension system, covering the social insurance fund.

Mousiouttas has previously said pensioners should begin receiving increased payments from February 1 of next year with the package designed to raise pensions while amending existing distortions.

He reiterated that the government would not increase either the statutory retirement age or social insurance contributions as part of the reforms.

“Everyone should take into account that the planning we have done is the maximum possible utilisation of the fund’s resources,” he said.

He added that any proposal involving additional expenditure would require corresponding savings elsewhere because the fund operates within fixed financial limits.

To finance the reforms, the government has relied on higher employment levels, as well as existing surpluses within the social insurance fund.

Mousiouttas said projections also take account of future investment returns once a dedicated fund and watchdog are established before the end of next year.

While he expressed confidence that a convergence could be achieved, employers and trade unions say significant issues remain unresolved until they see the government’s final proposals.

Cyprus chamber of commerce and industry (Keve) secretary-general Philokypros Rousounides said employers were waiting to assess the bill, particularly its financial impact in the long run.

“What we would like to see is mainly the contribution rate and the retirement age,” he said, arguing that maintaining both as they are, while increasing benefits, raises questions over the sustainability of the social insurance fund.

He said Keve continues to support expanding provident funds supported by incentives rather than making them compulsory, warning that mandatory schemes could place additional pressure on small and medium sized businesses already facing higher running costs.

From the trade unions, Sek leader Andreas Matsas said agreement on the first pillar should not proceed independently of wider discussions on the second pillar.

“The bill for the first pillar can be submitted to parliament, but it will not be acceptable for us to vote on the bill without ensuring that the second pillar has also been agreed upon in the planning,” he said.

Peo leader Sotiroula Charalambous said unions were also awaiting the government’s final position on issues including the 12 per cent reduction applied to pensions for those retiring at 63, widowers’ pensions and eligibility thresholds for low-income pension support.

Mousiouttas acknowledged that differences remain but said the government’s proposals reflect the maximum changes possible within the financial capacity of the system.

“Despite the slight delay, I still feel optimistic that the timetable we set will be met,” he said.

“Everyone feels the need for this reform to succeed and be done as soon as possible.”