Government details proposal to reduce pension cut for retirees at 63

Nicosia, Cyprus. The 12 per cent pension reduction applied to people retiring at age 63 dominated discussions at the Labour Advisory Board on Thursday as negotiations on the government’s pension reform continued. The government presented its proposal, while social partners set out their positions and reservations and called for a full financial assessment.

Government proposal

Labour Minister Marinos Mousiouttas described the discussion as “very good”, saying the government had presented its proposal on the 12 per cent reduction in detail in an effort to address concerns raised by social partners.

Under the proposal, the reduction would be lowered by 4.5 percentage points to 7.5 per cent on the basic pension. The change would not apply to the supplementary pension.

Mousiouttas said that, together with other proposed changes, the measures would raise the pensions of those affected by an average of about 6 per cent.

Number of pensioners affected

Around 40,000 of Cyprus’ 120,000 pensioners are currently subject to some form of reduction, Mousiouttas said. A further 40,000 pensioners are expected to be affected over the next five years, partly due to demographic trends and an ageing population.

He said the reform would not reduce existing pensions and would instead provide increases ranging from 5 per cent to 60 per cent.

Cost and further talks

The reform is estimated to cost €24 million for existing pensioners, with a further cumulative cost of €12 million over the next five years, Mousiouttas said.

Its cost and funding are expected to be discussed at a further meeting involving Finance Minister Makis Keravnos. Mousiouttas said the government remained open to proposals from social partners, provided they did not increase the overall cost of the reform.