Cyprus government unveils major pension system reform

Labour Minister Marinos Mousiouttas has announced a comprehensive overhaul of the Cypriot pension system, the first major change since 1980, aimed at ensuring long-term viability and addressing demographic shifts. The reform, presented at the 17th Pension Forum in Nicosia, proposes increasing required insurance contribution years from 33 to 38 and introduces a dual-income structure combining state pensions with mandatory occupational schemes. While the changes seek to increase retirement benefits by up to 60 per cent for those who work until 67, they make early retirement at 63 more difficult, imposing a 15 per cent pension cut for those choosing to exit the workforce early after a five-year transition period.

The initiative is set against the backdrop of the European Commission’s 2027 Ageing Report, which warns that the ratio of elderly citizens to the working-age population in Cyprus is expected to more than double by 2080. Experts, including the Cyprus Fiscal Council, stress that the current first-pillar state system is insufficient for future needs. The legislation is currently in the final stages of consultation and will soon be submitted to the Council of Ministers and the House of Representatives for approval.