Discussions on pension reform will continue on Monday at the Labour Advisory Board, with the participation of Labour Minister Marinos Mousiouttas and Finance Minister Makis Keravnos.

The meeting is due to begin at 9.30am at the labour ministry.

Mousiouttas has described pension reform as the most important reform being undertaken by the government this year, saying legislation covering its first pillar, the Social Insurance Fund, will be submitted to parliament during September.

He said one of the main objectives of the reform is to ensure pension adequacy and bring meaningful improvements to pension payments.

According to Mousiouttas, the reform will result in increases across all pensions, with greater support directed towards those most in need, particularly low-income pensioners.

He added that the changes are intended to ensure that both the benefits and burdens of the system are distributed fairly, while safeguarding its long-term sustainability for future generations.

Mousiouttas said around 40,000 of Cyprus’ 120,000 pensioners were currently subject to some form of reduction, with a further 40,000 expected to be affected over the next five years, partly as a result of demographic trends and an ageing population.

Under the government’s proposal, the 12 per cent reduction would be cut by 4.5 percentage points to 7.5 per cent on the basic pension, but not on the supplementary pension.

Meanwhile Government spokesman Konstantinos Letymbiotis said the reform would provide greater support for low-income pensioners while ensuring the sustainability of the social insurance fund for future generations. He said more than four in ten pensioners, or 51,664 people, were expected to receive increases of more than €100 per month once the reform was implemented.

Disy president Annita Demetriou meanwhile said that the government’s pension reform must deliver sustainable and adequate pensions without increasing contributions or the retirement age.

Pensions paid by the government are very low by European standards. In 2023 Cyprus government expenditure on pensions amounted to 7.6 per cent of GDP compared with 12.3 per cent for the EU and even a higher 14.0 per cent for Greece.

According to Eurostat elderly persons of 65 years and above in Cyprus, that are heavily dependent on pensions for their income, had a risk of being in poverty of 33.7 per cent. Notably, government expenditure on old-age pensions totalled 6.0 per cent of GDP in 2023 as against 9.9 per cent and 11.5 per cent of GDP, respectively, for the EU and Greece.