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- The government estimates the reform will cost about €820 million over six years, with €486 million borne by the state.
- Social insurance legislation will be separate from provident fund legislation, with the first phase covering the zero and first pillars.
- The proposal keeps the retirement age at 65, allows work until 67, and would cut the early-retirement penalty from 12% to about 7.5%.
- The government targets implementation of the pension reform for 1 January 2027.
The pension reform bill is expected to be submitted to the House of Representatives by the end of September, Labour and Social Insurance Minister Marinos Mousiouttas said on Monday.
Speaking after a meeting of the Labour Advisory Board, Mousiouttas said the government estimates the additional cost of the reform at around €820 million over six years. Of this, €486 million would concern the state and €334 million the Social Insurance Fund.
Separate legislation for provident funds
Mousiouttas stressed that the legislation concerning Social Insurance will be separate from legislation governing provident funds.
He said the first phase of the reform covers the so-called zero and first pillars, while a separate legislative framework will be prepared for the second pillar and provident funds.
The minister said a technical committee will meet on Tuesday to discuss the second pillar. He called for the process to be accelerated so that an agreement can be reached as soon as possible.
However, he clarified that agreement on the second pillar is not a prerequisite for the government to proceed with legislation covering the first pillar.
Social partners seek further cost details
During Monday’s meeting, social partners requested further clarification on the costing presented by the Finance Ministry last week.
Mousiouttas said the Labour Ministry had responded to the questions it was in a position to answer, while additional issues would be addressed by the Finance Ministry.
He said social partners had indicated that they wanted the article-by-article discussion of the bill to be completed before submitting their own proposals. That discussion began last Friday at the Social Insurance Council and is expected to continue over the next three days.
The minister said he expected social partners to submit their proposals at the next Labour Advisory Board meeting.
Reform cost estimated at €820 million
Mousiouttas said the government considers the €820 million figure to reflect what the state and the Social Insurance Fund can support while maintaining financial sustainability.
He said the reform is not limited to pension increases or support for low-income pensioners. It also includes state social insurance contributions for groups such as mothers caring for children, informal carers, students and people with disabilities.
The proposal also includes changes to unemployment benefits, including a reduction in the existing 12% cut.
Mousiouttas said the government was also considering the gradual return of money owed to the Social Insurance Fund through an independent fund to be established in line with European standards. Future surpluses would also be placed in the fund once borrowing from the Social Insurance Fund ends.
Retirement age remains unchanged under proposal
Asked about the retirement age, Mousiouttas said the government’s position remained that higher contributions could be considered if necessary to avoid either pension reductions or an increase in the retirement age.
He said the retirement age could only be reviewed following periodic studies of life expectancy and that any such change would be separate from the pension reform.
The government’s current proposal keeps the retirement age at 65, with the possibility of continuing to work until 67. It also proposes reducing the actuarial penalty for early retirement from 12% to around 7.5% for the basic pension.
Bill expected in Parliament by end of September
Mousiouttas reiterated that the bill would be submitted to Parliament by the end of September.
He noted that 1 October is a public holiday, meaning that if Parliament does not hold an extraordinary sitting, the formal submission could take place on 8 October. The first meeting of the relevant parliamentary committee is expected on 13 October.
He stressed that discussions can continue after the bill is submitted and that agreed changes can be incorporated without necessarily returning the legislation to the Council of Ministers.
The government has maintained that implementation of the pension reform is targeted for 1 January 2027.
Also read: Tax reform revenues rise 5.7% to €4.47bn
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