Nicosia, Cyprus. The government said it hopes to table legislation reforming the pensions system by June, with the reform set to take effect in January 2027. Labour Minister Marinos Moushiouttas made the comments while answering MPs’ questions during discussion of his ministry’s budget.
Social Insurance Fund borrowing and debt
The discussion focused on the pensions system and the Social Insurance Fund (SIF). For decades, the state has dipped into the SIF for financing, paying it 2.15 per cent interest for the money it borrows. Moushiouttas said the state’s accrued debt to the SIF amounts to €11.3 billion.
Planned contents of reform bills
Moushiouttas said the relevant bills would include a timeline for gradually repaying the government’s debt to the SIF, along with an investment policy for funds drawn from the SIF. He said the reform would result in a net increase in pension payouts, but he could not say by how much.
Early retirement deduction
Asked by an Akel MP whether the so-called “penalty” on pensions would be scrapped this year, Moushiouttas said likely no. The “penalty” is a 12 per cent deduction on pension payouts imposed on those retiring before 65 if they have completed 40 years of contributions.
Labour market and SIF reserves
Disy deputy Harris Georgiades said the SIF’s cash reserves appear to be on a positive trajectory, attributing this to what he described as a good situation in the labour market, with more people employed and contributing.
What changes do you expect the planned pension reform to bring when it takes effect in January 2027?
