The government is maintaining its target of implementing pension reform on January 1, 2027, despite delays in submitting the relevant bill due to a legal obstacle, Labour Minister Marinos Mousiouttas said on Friday.
Speaking to CyBC’s morning programme, Mousiouttas expressed confidence that the issue would be resolved in the coming days, allowing the bill to proceed to the Council of Ministers before being submitted to parliament.
He acknowledged that disagreements remained between the government, trade unions and employers’ organisations, particularly over financial matters.
The minister also outlined the government’s intention to encourage people to remain in employment longer, arguing that increasing life expectancy, labour shortages and the long-term sustainability of the Social Insurance Fund made such measures necessary.
“Our philosophy is that, with increasing life expectancy, people today are able to work at older ages. We believe it is in the interests of both the economy and the fund to discourage people from leaving employment before 65, which is the retirement age,” he said.
Under the proposed reform, the actuarial reduction applied to the basic pension for those retiring early would be reduced, with the changes benefiting existing pensioners and those retiring over the next five years.
Mousiouttas said the government intended to reduce the existing 12 per cent actuarial reduction, which has been in place since 2013, by four percentage points on the basic component of the pension.
At the same time, incentives would be introduced for private-sector employees who voluntarily choose to remain in employment until the age of 67.
“If someone in the private sector voluntarily wishes to continue working until 67, they will benefit from two additional pensionable years, from 65 to 67, as well as an increase of approximately 15 per cent in their pension benefits,” he explained.
The approach, he said, was designed to provide both an incentive to remain in employment and a disincentive to retire early.
“There are two reasons for this. Firstly, to maintain the sustainability of the fund, and secondly, because today in Cyprus, as we all know, there is full employment,” Mousiouttas said.
He argued that retaining experienced workers was particularly important for the economy.
“These experienced workers are needed to remain in the economy and continue working, so that they do not have to be replaced by foreign labour,” he said.
The minister also stressed the need to extend provident fund coverage to all employees, with the aim of introducing universal coverage as part of the broader pension reform.
Despite the outstanding legal and financial issues, Mousiouttas maintained that the government was working towards bringing the reforms into effect at the beginning of next year.
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