Concerns among social partners are intensifying over the government's proposed pension reform as it continues to target 1 January 2027 for implementation without having fully clarified the overall cost of the changes or how they will be financed.
Following concerns that contribution rates may need to increase to fund proposed pension improvements, discussions have now expanded to include the possibility of raising the retirement age. Trade unions have rejected the prospect outright, arguing that it falls outside the framework originally agreed for the reform talks.
At the same time, sources told Politis that concerns have been raised about the future performance of the Social Insurance Fund's (SIF) investment strategy, with expectations that returns may fall short of projections both in terms of performance and implementation timelines.
Financial data and reform costs
The economic aspects of the reform dominated Monday's meeting of the Labour Advisory Body, attended by Finance Minister Makis Keravnos.
Keravnos focused on the need to safeguard the long-term sustainability of the Social Insurance Fund.
According to information presented during the meeting, preliminary estimates place the cost of the reform at up to €500 million, although no comprehensive costing study has yet been submitted.
"At this stage, the main objective is to proceed with the first pillar," Keravnos said after the meeting. "The government's effort and initiative focuses on increasing pensions for low-income pensioners."
He stressed that pension reform must also remain compatible with economic sustainability and fiscal stability.
"The reform must be consistent with safeguarding the sustainability of the economy and fiscal balance, not only today but also in the future."
The minister added that safeguards are needed to protect public finances during periods of economic difficulty.
Proposed safeguards
Keravnos declined to provide details on how such safeguards would operate, saying social partners had already received some explanations.
According to information discussed during the meeting, one proposal would allow the state's annual repayment to the Social Insurance Fund to be suspended if:
- Public debt exceeds 60% of GDP, or
- The economy records negative growth.
"We are in the final stage and will work with an expert to examine every detail of the issue," Keravnos said.
Retirement age debate
Particular attention was drawn to comments from employer organisations regarding a possible increase in the retirement age.
Michalis Antoniou, director general of the OEB employers' federation, said that improvements being considered could lead to increased contributions and argued that legislation should also allow for the possibility of raising the retirement age if required to protect the fund's sustainability.
Speaking to Politis, Antoniou said the range of proposed improvements could be reduced in order to avoid either higher contributions or a higher retirement age.
Filokypros Rousounides, secretary general of the Cyprus Chamber of Commerce and Industry (Keve), noted that raising the retirement age had been discussed previously and argued that all parameters should be re-examined if economic conditions change.
Trade unions reject proposals
Trade unions have rejected any discussion of increasing either the retirement age or contribution rates.
Panikos Argyrides, deputy secretary general of SEK, said the organisation would not discuss extending retirement age limits beyond those already provided for in legislation and would not accept contribution increases beyond those already agreed.
He argued that some elements now being discussed appear to alter principles originally agreed at the start of the pension reform process.
PEO secretary general Sotiroula Charalambous said the introduction of such issues represented a departure from the framework on which dialogue began.
"We expected the finance minister to provide the financial framework for this reform," she said, calling for a detailed comparison of what the state pays today and what it would pay under the new system.
"If these data are not clearly presented to us, then the discussion is not particularly productive."
DEOK president Stelios Christodoulou also expressed concern, saying participants left Monday's meeting more worried than after previous discussions.
He said the organisation was awaiting written clarifications from the finance minister and reiterated that DEOK would not accept either a higher retirement age or contribution increases beyond those already scheduled through 2039.
Alexis Alekou, deputy secretary general of PASYDY, said that while ministers had presented figures and data, important gaps and concerns remained.
Government sticks to timetable
For his part, Labour Minister Marinos Mousiouttas reiterated that discussions remain on schedule, with the government continuing to aim for implementation on 1 January 2027.
He said the reform is intended to support a group of citizens who did not benefit from the tax reform completed earlier in 2026.
Mousiouttas added that the reform rests on three fundamental principles:
- Sustainability of the Social Insurance Fund.
- Preservation of fiscal balance.
- Broader economic stability.
The next meeting of the Labour Advisory Body is scheduled for Thursday.
