Advisory council chair says Cyprus pension reform is closer to social policy than a true overhaul

Nicosia, Cyprus. The pension reform now in progress resembles a “social policy” measure more than a real restructuring of the system, according to the Economy and Competitiveness Council, which gave its view on Monday. The council is an independent advisory body established in 2018.

Focus on low incomes

Council chair Demetris Georgiades said the current efforts under the planned reform are directed at raising pensions for people with low incomes. He pointed out that, based on historical experience and on developments across Western countries, adequate pensions depend on a first, second and third pillar, and possibly a fourth as well.

In his view, the approach taken in Cyprus is closer to social policy than to a far-reaching reform of the pension system. Referring to whether pensions will be sufficient over the long term, he said:

“It won’t solve for you the big problem.”

Government timetable and the pillars

The government intends to launch the reform at the start of 2027. Discussions between the government and stakeholders, including trade unions and employers’ organisations, concentrate on the first pillar. This involves changes to how the Social Insurance Fund operates, together with state pensions.

The second pillar covers provident funds and occupational pension schemes. A so-called pillar zero deals with pensions for low earners.

The government has chosen to handle the pillars separately. The bill submitted to parliament, which it hopes to see approved before the end of the year, deals only with the first pillar, while talks on the second pillar are continuing at the same time.

Call for an integrated approach

Georgiades argued instead for a single, integrated approach to the pension system.