Union and employer representatives outlined priorities and concerns over Cyprus pension reform after the first session of the Labour Advisory Board left several questions unresolved.
Speaking on Sigma’s programme “Mesimeri kai Kati”, Sotiroulla Charalambous, secretary-general of PEO, said the immediate priority is to increase low pensions while ensuring fairness and protecting the core principles of social insurance.
She explained that the proposal under discussion introduces major structural changes to the social insurance system and alters its underlying philosophy.
Four key conditions
Charalambous stressed that decision-makers must first gain a full picture of all parameters so every worker can rely on adequate retirement income for a dignified life.
She added that the reform must clearly resolve issues such as the 12% matter and other distortions in the system.
She also highlighted the state’s debt to the Social Insurance Fund, linking it directly to pension sustainability and the ability of future generations to secure adequate income.
Charalambous clarified that requesting a complete picture does not mean reforms to provident funds and the general social insurance system must happen at the same time. However, workers must know the total amount they will receive, how payments will work, the state’s contribution – with public debt to social insurance estimated at around €11 billion – and the shares paid by employers and employees.
Employers back increases without higher contributions
From the employers’ side, Michalis Antoniou, director-general of OEB, said he agrees with many of Charalambous’s points and adopts similar positions.
He described the pension system as crucial for the living standards of roughly one-third of the population in a developed economy, directly shaping quality of life, economic competitiveness and public finances.
Antoniou said low pensions should rise without increasing contributions, which he described as an “easy solution”. He argued that proposals linked to the International Labour Organization’s actuary appear to raise lower pensions by reducing higher private-sector pensions, even though those already remain below public-sector levels.
Call for holistic approach
Antoniou warned that any state withdrawal from funding the supplementary pension pillar would undermine the core principle of tripartite participation between the state, employers and workers.
He stressed that pension reform cannot proceed through fragmented discussion of a fundamentally holistic issue. Adequate income replacement and living standards for retirees require a combination of three pillars: the general system, occupational pensions and provident funds.
He clarified that provident fund reforms will not necessarily coincide with national system changes. Stakeholders must first agree on the future framework, who will bear the cost and how the reform will be financed.
Finally, he called for open studies examining economic competitiveness, public finances, retirees’ living standards and long-term pension funding. He noted that the decisions involved will shape fundamental issues for the next 40 years and said the government deserves sufficient consultation time with social partners, which OEB is willing to grant.
Also read: Three key pillars that boosted Cyprus’ economy in 2025
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