Cyprus pension reform cuts early retirement penalty to 7.5 per cent
Labour Minister Marinos Mousiouttas says the reform will raise pensions for thousands of retirees from January 1, without increasing the retirement age or contributions.
Cyprus's planned pension reform will keep the system viable for "40 or 50 years", Labour Minister Marinos Mousiouttas said on Wednesday, as reported by Cyprus Mail, addressing members of Akel.
According to the minister, all pensioners will see their pensions rise, with priority given to those on low incomes. He said more than 50,000 people will receive an increase of more than €100 per month, while almost 10,000 will get more than €200 extra each month. Pensioners whose current pension is €600 per month or less are set to receive at least €30 more.
Mousiouttas stressed that neither the statutory retirement age nor workers' social insurance contributions will increase, and that the fund is being shielded to secure pensions for future generations. He also said that, for the first time, periods outside paid employment – such as time spent raising children, caring for relatives, and periods of disability – will count towards a pension, which he said would begin to close the gender gap in pensions.
The reform is due to take effect on January 1, and the minister said the difference would be visible in pensioners' bank accounts by the end of that month. The government also plans to reduce the downward adjustment applied to early retirement pensions from 12 per cent to 7.5 per cent, an issue Mousiouttas described as a "source of bitterness". The first bill is to be put before parliament by October 8 at the latest.
The measures are expected to cost €820 million over six years: €486 million for the state and €334 million for the social insurance fund. Trade unions remain unconvinced, with Peo leader Sotiroula Charalambous warning that some pensioners could still fall below the poverty line, currently €1,018 per month, and calling for a full rather than partial reduction of the early retirement penalty.
What it means for residents
The changes will show up directly in monthly incomes from the start of next year, but the amounts involved mean the impact will differ sharply from one household to another.
- Payments rise from January. Most pensioners will see more money, with the biggest gains for low-income retirees; check that your bank details and contribution records are up to date so nothing is delayed.
- Contributions stay the same. Workers will not pay more social insurance, and the retirement age is unchanged, so current plans for when to stop working are not affected.
- Early retirement rules ease. The penalty for retiring early is set to fall from 12 per cent to 7.5 per cent, a change worth factoring in if you are weighing up when to leave work.
This text is written from the source article and is not a translation of it.
