Minister stands firm on early retirement pension reductions

The government’s goal is to bring the social insurance system into the 21st century, Labour Minister Yiannis Panayiotou said on Tuesday.

In an interview with the Cyprus News Agency (CNA), the minister discussed a number of issues concerning the social insurance fund, also highlighting that 2024 will mark 60 years since its launch in 1964.

The main issue Panayiotou discussed was pension deductions for early retirement, a debate which has raged on for years.

As it stands, the statutory retirement age in Cyprus is 65, but there is also the option for people to retire early at 63 and take a 12 per cent deduction from their monthly pension – a long-standing point of contention for unions and workers’ groups.

Originally, since 1993 people who had made social insurance contributions for 33 years could retire at 63, but Panayiotou explained that the reduction was established in 2012 as part of the then-government’s negotiations with the Troika, to ensure early retirement would not affect the social insurance fund.

“If there is no 12 per cent adjustment, all employees will bear the cost, which means that the contributions of all employees will increase,” he said. “No government and no labour minister would abolish the 12 per cent deduction because this is not practically possible.”

The labour minister said that a study is currently being conducted on the matter, but refrained from giving away further details before a meeting with the Social Insurance Council, which is scheduled later this month.

“It seems that those who have worked for a very long time started very early on and the vast majority do not have academic qualifications, they are workers who to a large extent have worked in manual occupations and are low paid,” he said.

The minister also announced that the bill on telework in the private sector has been updated and will be sent to the House labour committee for discussion.

He added that the ministry of finance will soon complete the framework for flexible forms of work in the public and broader public sector, while referring to the orientation that exists from the point of view of public administration for a four-day work week.

On the committee for the re-evaluation of the minimum wage, the labour minister said that names have already been put down for representatives of various social partners that will participate in the committee, which is due to start operating in the near future.

Regarding dealing with long delays in the processing of applications, Panayiotou said that the preparation for a number of legislative or procedural changes has been completed, and that the goal is for payments to be processed within a month.

“We have already launched a series of actions with the slogan ‘within a month,’ meaning that members of the public can be informed of either a positive or negative response to the request they have submitted,” he said.

He added that the ministry is giving civil servants the option to work overtime to process the large backlog of requests and speed up the whole process.

The minister also mentioned other issues being tackled at the moment, such as false self-employment and indefinite-term workers, and easing working hours for parents of multiple children.

Commenting on the social insurance system, Panayiotou said that the operating software used in Cyprus is the most outdated in the EU.

“We want, within the next few years, to have the most modernised system of any European country so that from last we become first,” he said.