The government's aim of submitting pension reform legislation to the House of Representatives by 20 September now appears unattainable, according to SEK Secretary-General Andreas Matsas, who says social partners have still not received the draft legislation.
Speaking to the Cyprus News Agency (CNA), Matsas said meaningful discussion of the bill would not be possible at the first meeting of the Labour Advisory Body on 19 August because stakeholders have not yet been given the text.
"It is impossible to expect an in-depth discussion," he said, adding that the meeting is likely to have an introductory and exploratory character.
He noted that social partners had originally been told they would have approximately two months to examine the legislation before it moved forward.
Even if the draft is circulated this week, Matsas said the summer holiday period would make it difficult for organisations to convene their collective bodies and formulate positions before the end of August.
Reform must include provident funds
Matsas stressed that any meaningful reform must extend beyond the Social Insurance Fund and incorporate the second pension pillar, namely provident funds.
"If we are to support the reform, the design must be comprehensive. Otherwise, we will not be talking about reform but about piecemeal revisions."
According to Matsas, the legislation currently being prepared concerns amendments to the Social Insurance Fund framework, including issues related to the minimum pension, state support for pensioners unable to meet minimum contribution requirements and the so-called 12 per cent penalty.
Provident funds are expected to be addressed through separate legislation following discussions within the social partners' technical committee.
SEK's position is that the second pillar should form part of the overall reform framework, even if implementation takes place at a later stage.
"If there is no overall plan and the second pillar is postponed for two or three years, nobody can guarantee that it will eventually become part of the reform."
He added that the objective should be pension adequacy, arguing that the first pillar alone cannot deliver adequate retirement income.
Despite the delays, Matsas said he still believes it is possible for the overall reform package to be approved by the end of the year if dialogue continues.
Debate over higher pensions
The issue of higher pensions has also moved into focus following reports suggesting possible reductions in some retirement benefits as part of the reform.
According to CNA information, social partners are not expected to accept any intervention affecting pension benefits that derive directly from contributions paid into the Social Insurance Fund.
The discussion is linked to efforts to improve lower pensions, but questions remain over what constitutes a "high" pension and whether benefits earned through contributions can legitimately be reduced.
Social partners reportedly maintain that pensioners receiving higher benefits should not be viewed as financing lower-income pensioners, arguing that support for low pensions should be addressed through state policy rather than by reducing contributory benefits.
Both President Nikos Christodoulides and the Labour Minister have publicly stated that the pension reform will not have a negative impact on pensions.
Source: CNA
