Public sector unions seek abolition of pension penalty for forced early retirement

Nicosia, Cyprus. Public sector unions are seeking the full abolition of a 12% pension penalty for workers who are legally required to retire before the age of 63. The issue was raised at a meeting of state sector organisations at PASYDY’s offices on the government’s pension reform bill.

Retirement requirements

The unions argue that workers forced to retire early do not choose to leave employment and should receive their full pension without the penalty.

The issue was raised most strongly by police officers, while military personnel and primary school teachers also expressed concerns. Police, firefighters, military personnel and primary school teachers are required to retire before the official retirement age of 65 and, in some cases, before the age of 63, when the early retirement actuarial penalty applies.

Police officers must retire at 62, while military personnel may retire considerably earlier, in some cases at 55 or 57.

Pension reform concerns

The 12% penalty was among six issues discussed by the organisations. Other concerns included the coefficient used to calculate basic and supplementary pensions, the actuarial reduction for early retirement, the sustainability of the Social Insurance Fund, support for low-income pensioners and contribution payments for people employed after the age of 65.

The unions also requested clarification on the government’s proposed system for calculating the penalty on a unit basis after the reform takes effect.

Public sector workers currently receive only the basic portion of the Social Insurance Fund pension, for which they pay a lower contribution rate than private sector workers.

Labour Advisory Body session

The issues raised at the PASYDY meeting are due to be discussed at the Labour Advisory Body’s session on Friday, August 28.

Labour Minister Marinos Moushouttas has said that requests involving additional costs must include proposals for equivalent reductions elsewhere to maintain budget balance.

The Labour Advisory Body is expected to hold its second consecutive session, focusing on clarifications and questions regarding the pension reform bill. Social partners are not expected to adopt a formal position at the session but may submit proposals on areas of disagreement, including the 12% penalty.

Unions are preparing counter-proposals aimed at securing greater benefits for workers required to retire early.