The government has presented the outline of five key pillars for reforming the second pillar of the pension system, which αφορά occupational pension schemes, known as provident funds, without providing details on how the plans will be implemented.
The long-anticipated announcement, awaited by social partners, did not include major revelations, with the government opting for a cautious approach in order to preserve the current positive labour climate.
Labour Minister Marinos Mousiouttas said the reform will focus on strengthening and upgrading the supervisory authority, enhancing the legislative framework and oversight of occupational pension institutions. Other pillars include expanding participation in second-pillar pension schemes, improving the adequacy of retirement income, and conducting quantitative assessments of policy options and their impact on pension outcomes. The reform will also address the tax treatment of the second pillar, including contributions, investment income and pension benefits.
Independent oversight remains contentious
One of the few clear positions outlined was the move towards independent supervision, a proposal that has already drawn opposition from trade unions. Despite this, the government avoided entering into detailed discussions or presenting concrete options at this stage.
“Today we opened at least a small window on the second pillar,” Mousiouttas said.
Discussions move to technical level
The minister confirmed that the next phase will involve referral of the proposals to technical committees for in-depth examination, while dialogue will continue within the Labour Advisory Body on issues related to the first pillar of the pension system. Asked about disagreements, Mousiouttas said no substantive differences emerged, as no specific policy choices were discussed.
“Each side has its own views, and our role is to see how we can reconcile them for a better standard of living for workers and pensioners,” he said.
Employers’ organisations are also raising concerns about the sustainability of the Social Insurance Fund, while trade unions are calling for mandatory participation in provident funds.
The next meeting of the Labour Advisory Body is scheduled for March 30, where discussions will continue, focusing on the investment policy of the Social Insurance Fund. The minister noted that future discussions will involve interaction between the first and second pillars, depending on the outcomes of technical committee deliberations.
Council and committees to convene
The Council of Institutions for Occupational Retirement Provision, chaired by registrar Nikos Koullapis and involving social partners and the Finance Ministry, is expected to meet today to discuss upcoming labour-related changes linked to Cyprus’ EU presidency. A separate technical committee will also meet to examine the extension of collective labour agreements.