Pension reform to raise payments for 123,000 retirees in Cyprus

Around 123,000 retirees will see their pensions rise under the government's planned reform, Labour and Social Insurance Minister Marinos Mousiouttas said on Wednesday, as reported by Cyprus Mail. He was speaking at an event organised by the citizens' group “55 Συν Πλην Μαζί – Κύπρος” on the pension overhaul.

According to the Minister, more than 50,000 retirees will receive increases of over €100 a month within five years, while more than 8,000 will see their pensions rise by more than €200. Depending on the case, he said, increases range from 5% to 55%.

The draft bill was put to public consultation on the e-Consultation platform on 3 September, with the deadline for submissions closing on 16 September. Mousiouttas said the social dialogue is at its most intensive stage, with the draft handed to social partners in mid-August and meetings held twice a week. “The dialogue is demanding and, yes, there are disagreements. That does not worry me. The opposite would,” he said.

The bill is due to be submitted to the House of Representatives within September, and the government's target is for the new system to apply from 1 January 2027, with retirees seeing the increases in their accounts at the end of January. The reform, designed with the support of the International Labour Organization, aims to ensure adequate income for those who have worked a lifetime, restore fairness between and within generations, and keep the Social Insurance Fund viable for decades to come.

At the core of the changes is a revised basic pension, whose level will depend on total time registered and insured rather than complex calculations. Periods subsidised by the state, previously treated as gaps, will count. The retirement age stays at 65 and does not increase; those who wish may keep working and contributing until 67 for a higher pension. The basic pension calculation coefficient rises from 1.1 at 63 to 1.3 at 65 and up to 1.5 at 67. The 12% actuarial reduction for those retiring at 63 will be substantially eased to around 7.5%, on a lifelong basis, covering both current retirees and those retiring during the five-year transition. A minimum guaranteed increase of €30 a month will apply to existing Social Insurance Fund retirees with pensions up to €600, payable from the first month of implementation.

Increases will be phased in over a five-year transition from 2027 to 2031, with 30% of the total increase paid in the first year and another 30% in the second — 60% within the first two years. As an example, a retiree with a full working life currently receiving €504 could see a total increase of around €250 by the end of the five years. Social Pension recipients will be integrated into the Social Insurance Fund as a special category with their rights safeguarded, and the state will cover contributions for those unable to pay, based on income criteria. Disability, widowhood and orphan benefits, along with supplements for each dependent child, are also being reformed. The reform broadens the funding base by introducing mandatory contributions on income such as dividends, interest and rents, up to a set ceiling.