Cyprus government advances major pension reform plans

The Cypriot government, led by President Nikos Christodoulides and Labor Minister Marinos Mousiouttas, is finalizing a comprehensive pension reform bill scheduled for submission to Parliament in late September 2026. Two critical meetings of the Labor Advisory Body are set for August 19 and 28 to discuss the draft legislation with social partners. The reform aims to implement changes by January 1, 2027, with the President indicating that low pensions may see increases between €250 and €300.

Key pillars of the reform include adjustments to the first pillar involving the Social Insurance Fund (TKAS) and the contentious 12% actuarial penalty for those retiring at 63 instead of 65. Unions like SEK, PEO, and DEOK advocate for a broader reform that mandates a second pillar involving Provident Funds to ensure financial security. Conversely, employer organizations such as OEB and KEBE remain cautious about legislative interference in private sector Provident Funds. President Christodoulides has urged Parliament to avoid prolonged debates to ensure citizens benefit from the changes promptly. Following productive economic discussions between Finance Minister Makis Keravnos and Minister Mousiouttas, the government expects to release the finalized bill to stakeholders by the end of the current week.