CIFA says Cyprus investment funds ready to support pension Second Pillar

Nicosia, Cyprus. Cyprus’s investment fund industry, worth €11.2 billion, is prepared to help strengthen the pension system’s Second Pillar, according to Cyprus Investment Funds Association (CIFA) president Maria Panayiotou. She said the sector could provide modern European investment tools offering transparency and reliability.

Coverage and retirement income

Panayiotou highlighted the role of the Second Pillar, comprising provident funds and occupational pension schemes, alongside the Social Insurance Fund, which constitutes the First Pillar.

Finance Ministry figures show that provident funds held €4.65bn for approximately 146,000 members at the close of 2025, providing an existing foundation for further development.

However, University of Cyprus professor Andreas Milidonis has put the country’s income replacement rate after retirement at about 41 per cent, among the EU’s lowest. According to Milidonis, more than 300,000 workers do not have adequate coverage under the Second Pillar.

Panayiotou noted that social partners, independent institutions and academics had highlighted the pillar’s importance from their respective standpoints. She cited Fiscal Council chair Andreas Charalambous, who recently argued that ensuring pensions remain sustainable over the long term in Cyprus requires a gradual expansion of the Second Pillar.

Reform discussions and savings management

According to Panayiotou, intensive discussions in recent days about the revised pension reform bill showed that the State, employers and employees had a common objective despite legitimate differences over their approaches. She said all sides sought to ensure decent living standards for future pensioners while preserving the system’s sustainability for generations to come.

She explained that the breadth of participation, whether it would be compulsory or voluntary, and the implementation schedule remained subject to social dialogue.

Whatever the outcome, Panayiotou said, the shared challenge would be to ensure transparent, safe and professional management of workers’ savings at reasonable cost, without placing an excessive administrative burden on businesses, especially small and medium-sized enterprises.