Government proceeds with pension reform plans despite social partner concerns

On September 7, 2026, the Labour Advisory Body convened in Cyprus to discuss the progress of the government’s comprehensive pension reform. Labour Minister Marinos Mousiouttas and Finance Minister Makis Keravnos emphasized the goal of implementing the first pillar of the reform by January 1, 2027. The primary objective is to increase pension benefits for low-income pensioners, ensuring a more dignified standard of living while maintaining the long-term fiscal balance and sustainability of the Social Insurance Fund.

During the meeting, government officials stressed that the reform will include safety valves to protect the system against future economic crises. However, the proposal met with significant skepticism from social partners, including employer organizations and trade unions. Key points of friction emerged regarding potential increases in retirement age and social contribution rates, as well as the long-term financial viability of the funds. While the government aims to submit the bill to the House of Representatives by the end of September, social partners requested detailed economic data, which the Ministry of Finance has committed to providing in the coming days.

Moving forward, the dialogue remains critical as the government attempts to bridge differences with stakeholders. The opposition party AKEL, led by Stefanos Stefanou, has also engaged with the Labour Ministry, calling for structural corrections to the 12% early retirement penalty and survivor pensions.