Cyprus prepares for major pension reform in late September

The Cypriot Ministry of Labor, led by Marinos Mousiouttas, plans to submit a comprehensive pension reform bill to Parliament by the end of September 2026. The reform aims to establish a more adequate, fair, and sustainable system, with the government setting a target for implementation by January 1, 2027. Key proposals include increasing all pensions, with a focus on supporting low-income pensioners, and introducing pension credits for parents, individuals with disabilities, and informal caregivers. The government has also pledged to repay the 12 billion euro debt the state historically accumulated from the Social Insurance Fund (SIF).

Minister Mousiouttas explicitly stated that there is no intention to raise the retirement age. While the draft legislation includes a potential provision for future contribution increases, the minister characterized reports of imminent hikes as misleading, clarifying that such a measure would only be discussed if necessary to maintain the fund's viability without compromising future generations. Social partners, including trade unions and employer organizations, have expressed varying levels of concern regarding the effectiveness of the proposed reforms. Future consultations are scheduled, with the next session of the Labor Advisory Body set for September 17, as the government continues to navigate the complexities of long-term fiscal sustainability.