Cyprus government advances major pension system reform

The Cypriot government, led by Minister of Labour and Social Insurance Marinos Mousiouttas, is currently advancing a significant pension reform intended to be the most substantial structural change of the year. Following consultations with political parties, including a meeting with Democratic Party (DIKO) leader Nikolas Papadopoulos on September 4, the government plans to submit legislation for the first pillar of the Social Insurance Fund (SIF) to the House of Representatives by the end of September.

The reform aims to improve pension adequacy and ensure long-term system sustainability. Minister Mousiouttas stated that the proposal includes across-the-board increases, with a focus on supporting low-income pensioners and the middle class to ensure a fairer distribution of benefits. Approximately 40,000 pensioners are currently facing benefit reductions, with another 40,000 projected to be affected in the next five years, which the new framework seeks to address.

On September 7, Minister of Finance Makis Keravnos joined the Labor Advisory Board to discuss the fiscal implications of the plan. Keravnos emphasized that any adjustments must align with actuarial studies from the International Labour Organization (ILO) and the Ministry of Labour to ensure the fiscal stability of the Social Insurance Fund. The government is currently finalizing these details with social partners to balance social needs with economic viability.