Government considers front-loading pension increases under reform plan

Nicosia, Cyprus. Up to 60 per cent of planned pension increases could be introduced during the first two years of the government’s pension reform, Labour Minister Marinos Mousiouttas said in an interview published by the Cyprus News Agency on Thursday. The first reform bill is expected to be submitted to parliament in September.

Implementation scenarios

Under the most ambitious scenario being considered, 30 per cent of the planned increase would be implemented in the first year and another 30 per cent in the second year. A further 10 per cent would be introduced in each of the third and fourth years, while the remaining 20 per cent would follow in the fifth year.

Mousiouttas said the proposal remained under consideration and that the possibility of shortening the overall implementation period was also being examined.

Fund sustainability

The minister said the full increase could not be introduced in the first year because the sustainability of the social insurance fund and the effect on economic indicators had to be considered.

Additional demands on the fund would have wider consequences for the economy, he said.

The phased approach would apply to pension increases but not to the “small cheque” benefit for low-income pensioners, which would be paid immediately to eligible recipients.

Consultations and legislation

Discussions on the bill concerning the “small cheque” are due to continue on Friday with a meeting of the technical committee, followed by a meeting of the Labour Advisory Body.

Mousiouttas said substantive talks could begin once the social partners finalise their positions, which he said should occur within about 10 days at the latest. The aim is to reach an agreement by mid-October.

The government is open to suggestions, he said, provided they do not alter the substance of the reform or put the social insurance fund at risk.