Pension Reform: Plans to Complete Legislative Changes by 2025
Pension reform is a key priority for the Cyprus government. Labour Minister Yiannis Panayiotou highlights the need to modernize the current system. The goal is to meet the needs of the country’s workforce and future retirees. The government aims to create the most advanced pension system in the European Union. They plan to improve efficiency and reduce delays in pension processing. Legislative changes are expected to be completed by 2025.
Panayiotou highlighted several critical aspects of the reform. One key focus is addressing the 12% pension reduction for early retirees. This particularly affects those who have contributed for 33 years or more. The goal is to ease the penalty for early retirement. However, the reduction will not be completely abolished. Additionally, the government is reviewing how pensions can better support low-income pensioners. Amendments are also being made to allow widowers to receive pension benefits in certain cases. The reform process involves a cross-ministerial committee.
This ensures thorough discussion and collaboration accross different sectors. The Ministry is working with international bodies such as the international labour
Organization (ILO) and Austria’s government to accelerate the reform process, backed by funding from the EU’s Recovery and Resilience Fund (Cyprus Mail)(CBN).
These initiatives aim to adapt to modern needs. This includes addressing teleworking and flexible work conditions. Another focus is tackling the ageing software system used by the social insurance fund. These reforms reflect the government’s commitment to creating a sustainable and equitable pension system that benefits current and future retirees.
Cross-ministerial Committee for Pension Reform
The Cyprus government has announced the formation of a cross-ministerial committee tasked with addressing pension reform, a crucial element of its agenda under the Labour Minister, Yiannis Panayiotou. This committee will coordinate efforts across various government ministries to ensure comprehensive reform of the current pension system.
Key objectives of the committee include:
Revising retirement age: Aligning public officials’ retirement age with private sector workers, setting it uniformly at 65 years instead of 60.
Addressing early retirement penalties: Examining ways to mitigate the 12% reduction in pensions for early retirees, especially those with long-term contributions(Cyprus Mail).
Supporting low-income pensioners: Ensuring reforms benefit lower-income pensioners, addressing income disparities.
Modernization efforts: The committee will work towards digitizing and modernizing pension administration to streamline processes and ensure timely payments(CBN).
The committee’s work will be informed by both technical support from international bodies like the International Labour Organization (ILO) and insights from actuarial studies, with a timeline set to finalize legislation by the end of 2025(CBN).
Labour Minister aim is for Cyprus to have the most modern pension system in the EU
Labour Minister Yiannis Panayiotou has set a bold vision for Cyprus to develop the most modern pension system in the European Union. This initiative aims to overhaul the country’s pension infrastructure, making it moreefficient, sustainable and technologically advanced.
Key aspects of this modernization include:
Technological Upgrades: Cyprus currently has one of the oldest social insurance systems in the EU, with outdated software that hinders the
timely processing of pensions. The modernization will focus on upgrading this infrastructure to ensure faster and more accurate pension payments(CBN).
Improved Pension Processing: The Labour Ministry plans to reduce the significant delays in pension applications by
implementing legislative and procedural reforms. The goal is to ensure that pension payments are processed within one month of submission(CBN).
Sustainability: The reform aims to create a sustainable Social Insurance Fund that can support citizens adequately, now and in the future. This involves structural adjustments to ensure that the system remains financially viable, considering long-term demographic challenges(Cyprus Mail).
International Support: The government is receiving technical assistance from the International Labour Organization (ILO) and the Austrian government, with funding from the EU Recovery and Resilience Fund to facilitate the reform(CBN).
This ambitious plan aligns with Cyprus’ broader objectives of modernizing public administration and making the pension system fairer, more efficient, and more responsive to the needs of its citizens.
