As discussions on pension reform resume, Cyprus’ social partners are setting out sharply defined positions ahead of a meeting of the Labour Advisory Board on 16 February. Trade unions are urging the government to pursue a fully integrated reform framework, while employer organisations are commissioning independent studies focused on the financial sustainability of the system.
Positions ahead of the Labour Advisory Board meeting
Trade unions are calling on the government to promote a comprehensive pension reform rather than a partial intervention, while the employer side is placing emphasis on the sustainability of the Social Insurance Fund.
The issue is set to be discussed at the Labour Advisory Board meeting scheduled for 16 February, with social partners presenting their views to Politis.
SEK perspective on the scope of reform
The General Secretary of Cyprus Workers’ Confederation (SEK), Andreas Matsas, told Politis that the original design and implementation were based on a comprehensive pension reform in order to ensure proper adjustments.
He said that the understanding reached was for an integrated reform covering the first pillar, the Social Insurance Fund, the second pillar relating to provident funds, the third pillar of private insurance, and pillar zero, involving state intervention to secure adequate and improved pensions for those unable to contribute.
Mr Matsas added that key issues also include the investment policy of the Social Insurance Fund, the repayment of state debt to the fund, and the 12 percent penalty on pensions, particularly its horizontal adjustment.
“If the political choice is ultimately to discuss only the Social Insurance Fund, then this does not constitute comprehensive pension reform but a partial one,” he said.
According to Mr Matsas, the process has been ongoing for many years and the sudden intention to alter the framework is concerning. He described such an approach as dangerous and fragmented, warning that excluding the provident funds, which constitute a core pillar, could create additional risks.
PEO calls for substantive improvements
The General Secretary of PEO, Sotiroula Charalambous, told Politis that pension reform must proceed with a focus on key parameters.
She said that retirement must guarantee an adequate income and stressed that increases in basic pensions should be substantive. She added that long-standing issues, including the 12 percent penalty, need to be resolved.
Ms Charalambous noted that based on what has been presented so far, the penalty issue appears to be addressed only partially and only for certain groups of pensioners, rather than for all current and future beneficiaries.
She also said that the issue of survivor’s pensions for men whose spouses died before 2018 does not appear to be resolved.
In addition, she expressed concern over changes to the structure of the Social Insurance Fund, noting that the proportional component would be financed solely through bilateral contributions. She highlighted the importance of addressing the state’s debt to the fund and called for information on the management of its reserves.
Further clarification is also sought regarding the design of the second pillar, including its key parameters, as well as the planned measures to support low-income pensioners, described as the most vulnerable group.
PASYDY concerns over state contribution
The General Secretary of PASYDY, Stratis Matthaiou, said that according to information provided by the Minister of Labour, the immediate focus will be on the first pillar, the Social Insurance Fund, and the 12 percent issue.
He said it is necessary to ensure adequate and dignified pensions for all pensioners, alongside a rational solution to the 12 percent penalty.
Mr Matthaiou also pointed out that the current design предусматриes the non-payment of a state grant towards the supplementary part of pensions. He said this raises concerns that need further discussion, particularly with regard to the overall sustainability of the Social Insurance Fund.
DEOK on addressing low-income pensioners
The President of DEOK, Stelios Christodoulou, said that pension reform should provide solutions to the problems currently faced by low-income pensioners.
He stressed the need to complete the dialogue process and proceed with implementation. According to Mr Christodoulou, solutions must be found for the 12 percent penalty, provident funds, and the fund’s investment policy in order to strengthen its financial position.
He also called for government participation in the supplementary part of pensions through an indicative contribution and said that the poverty threshold should be increased based on updated and realistic data.
Employer organisations commission technical studies
From the employer side, a techno-economic study by an independent expert is being prepared, with a focus on the financial sustainability of the fund.
The General Secretary of Cyprus Chamber of Commerce and Industry (KEVE), Philokypros Roussounidis, told Politis that an agreement has been reached with the Employers and Industrialists Federation (OEB) to commission an independent techno-economic study on pension reform.
He said that employer organisations will present their positions in a substantiated manner, emphasising that their primary concern is the sustainability of the Social Insurance Fund, as well as ensuring that the system remains flexible and fair.
OEB Assistant Director General Lena Panayiotou said that the federation is reviewing proposals submitted by the actuary regarding the design of the first pillar. She added that OEB has already initiated its own in-depth technocratic study.
Ms Panayiotou said there are issues related to financial aspects and future funding that require clarification, stressing that the cost framework agreed for the period from 2009 to 2039 must not be increased in any way, neither for employees nor for employers.
Source: Politis Sunday Edition