Cyprus government unveils pension reform package for 2027 implementation

The Cypriot government is advancing a comprehensive pension reform scheduled for implementation on January 1, 2027. Minister of Labour Marinos Mousiouttas confirmed that the proposal includes pension increases for all retirees, with over 51,000 of the 123,212 current social insurance pensioners expected to see monthly increases exceeding €100. The plan aims to modernize the system, which has not seen major overhauls since 1980, and includes specific provisions for mothers, caregivers, disabled individuals, and young entrants to the labor market.

Central to the debate is the restructuring of the low-pensioner allowance, commonly known as the "small axe." The government proposes two scenarios for calculating benefits, involving increased income thresholds—rising from €794 to €900 for single households and €1,191 to €1,350 for couples. While the government guarantees that no beneficiary will see a decrease in total income, trade unions including PEO, SEK, and DEOK have expressed dissatisfaction, arguing that the reforms may not sufficiently alleviate poverty or address the actuarial reduction penalty of 12%. Consultations with social partners are set for August 28, with the government aiming to submit the first pillar bill to the House of Representatives by September.