Cyprus prepares for major pension reform by 2027

The Cypriot government has unveiled a comprehensive pension reform package aimed at restructuring the Social Insurance Fund. Scheduled for implementation on January 1, 2027, this initiative represents the most significant update to the system since 1980. The reform includes plans to increase pensions for all 123,000 existing beneficiaries, with a focus on supporting those with low income. Furthermore, the proposal seeks to reduce the actuarial penalty for early retirement at age 63 from 12% to 7.5% of the basic pension component, although some labor organizations, such as EKSY, argue that this reduction remains insufficient as it does not apply to the total pension amount.

Additional measures include the recognition of notional pensionable earnings for women who paused their careers to raise children, as well as protections for caregivers, students, and new labor market entrants. Labor Minister Marinos Mousiouttas confirmed that while the government aims to submit the bill to the House of Representatives in September, negotiations with social partners remain ongoing, with further consultations set for August 28. The reform will be implemented gradually over a five-year period, with the government emphasizing that the changes will ensure long-term sustainability while improving the quality of life for current and future pensioners.