Cyprus government announces major pension system reform

The government of Cyprus is set to introduce a comprehensive reform of the social insurance system, with a target implementation date of January 1, 2027. Labour Minister Marinos Mousiouttas announced that the relevant legislation will be submitted to the House of Representatives in the coming days, marking the first fundamental overhaul of the system in nearly 50 years.

The reform aims to enhance pension payouts, particularly for those receiving lower benefits, and includes provisions to credit periods of child and relative care, disability, and studies toward pension entitlements. A key component of the plan is the cessation of state borrowing from the Social Insurance Fund, which currently holds reserves of approximately €12 billion, and the implementation of a schedule for the gradual repayment of existing government debt to the fund. Future surpluses are expected to be managed under a new, transparent supervisory framework.

Additionally, the government is working through social dialogue to strengthen the second pillar of pensions, focusing on occupational schemes and provident funds. The authorities emphasize that these changes are necessary to ensure the long-term viability of the system in the face of demographic aging and shifting labor market conditions.