Pension reform in Cyprus aims to increase the basic pension to the highest possible level without undermining the financial stability of the Social Insurance Fund, Labour and Social Insurance Minister Marinos Moushiouttas said on Tuesday.
Presenting the ministry’s achievements and 2026 priorities, the Minister described the pension reform in Cyprus as the “cornerstone” of the government’s upcoming social policy agenda.
He stressed that any increase to the basic pension will be carefully calibrated based on the fund’s long-term sustainability.
Asked about the level of the minimum pension under the reform, the Minister said the final figure will be lower than €1,088, according to actuarial assessments.
“We are giving the maximum possible without disturbing economic balances,” said the Director General of the Ministry, Stelios Himonas, adding that the final amount will reflect the fund’s capabilities.
The Minister also noted that the largest percentage increases will benefit the lowest pensions.
Timeline for Cyprus pension reform
The government presented a detailed timetable for the pension reform in Cyprus, which includes submission of draft legislation to Parliament in June 2026, parliamentary discussion in September 2026, and full implementation from 1 January 2027.
The Minister said social partners appear to have fewer disagreements on the First Pillar but require further clarification and data.
He added that the most significant differences lie in the Second Pillar, though he expressed optimism that ongoing dialogue could resolve them.
The First Pillar of the pension reform introduces a new redistributive “Basic Pension”, replacing both the minimum and social pension, while maintaining the contributory nature of the supplementary pension.
It also includes reduced actuarial cuts for early retirement at 63, expanded contribution options, and credited insurance contributions for caregivers, uninsured mothers, new labour market entrants, and persons with disabilities.
The Second Pillar, covering occupational pension schemes, will be upgraded over three to four years, with strengthened regulation, an independent supervisory authority, and broader worker participation.
Social Insurance Fund sustainability
A key component of the pension reform is safeguarding the Social Insurance Fund.
The government plans to end state borrowing from the fund, establish an independent supervisory authority, and create a separate account for surplus transfers and repayment of state obligations.
Officials emphasised that investment policy changes will be implemented cautiously to ensure financial security and avoid high-risk exposure.
Labour market performance and social policy
Alongside the pension reform, the Minister highlighted strong labour market performance in 2025.
Employment reached 81.3%, exceeding the national 80% target for 2030 five years ahead of schedule.
Unemployment fell to 4.4%, while youth unemployment dropped to 13.5%, below the EU average for the first time since 2011.
The average monthly salary reached €2,605, while the median stood at €1,968, reflecting significant growth since 2022.
Social measures and digital services
The government also pointed to broader social policy improvements, including extended maternity leave, expanded parental leave, and new support schemes for young mothers.
Administrative efficiency improved significantly, with reduced processing times for benefits and over 44,000 queries handled by the digital assistant system.
Cyprus also recorded improvements in labour inspections, workplace safety, and reduction of undeclared employment.
Officials said pension reform in Cyprus aims to ensure long-term adequacy of pensions, reduce poverty risk among retirees, and secure the sustainability of the Social Insurance Fund, while maintaining a balanced and economically responsible framework.
Source: CNA
Also read: Rizoelia farmers protest sparks police dispute
For more videos and updates, check out our YouTube channel
