Economy

Pension reform: New options soon for the 12% “penalty”

By: SigmaLive English

Date:

Pension reform consultations continue

Discussions on Cyprus’ pension reform are ongoing at the Labour Advisory Council, with Minister of Labour and Social Security, Marinos Mousiouttas, confirming that alternative options regarding the proposed 12% actuarial reduction will be presented in upcoming sessions. The government aims to submit the bill to Parliament in June 2026, with implementation planned for 2027.

Focus on equity and low pensions

The Minister described the reform as a “landmark change” needed by society, aiming to increase low pensions, improve benefits, and reduce gender disparities. The 12% actuarial reduction remains part of the first-pillar discussions, alongside fund investment strategy, repayment of state debts to social insurance, and overall pension reform measures.

Structured legislative timeline

The first-pillar bill is scheduled for parliamentary submission in June 2026, with parliamentary debate expected between September and December 2026. The government plans to present updated investment policies and alternative pension measures following actuarial review, ensuring no delays in the legislative process.

Second pillar and social insurance measures

The second pillar will not be implemented simultaneously with the first due to technical reasons, with a projected timeline of approximately three years post first-pillar implementation. Additionally, a new framework for regulating overdue social insurance contributions is under preparation, simplifying repayment for employers, businesses, and citizens, with a proposed duration of four years.

Other labour initiatives

The government will also submit a bill on minimum wage adequacy, targeting collective agreements coverage of 80% by September 2026. Legislation enhancing employer obligations for employee safety and training has already been filed. Upcoming proposals include parental, maternity, and paternity leave for foster parents, requiring coordinated amendments to social insurance legislation.

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