The divergence of views emerged on Thursday at a meeting of the Labour Advisory Body, attended by Labour Minister Marinos Mousiouttas and representatives of both unions. Mousiouttas acknowledged the differences of opinion as legitimate, but said it had been decided to move forward with the submission of the bill. "We have the whole summer ahead of us to discuss further," he said, adding that the aim is for parliamentary debate to begin when the House reconvenes in the autumn, with implementation targeted for 1 January 2027.
Social Insurance Fund investments
Mousiouttas outlined five key pillars of the reform. The first is the termination of the longstanding practice of the state borrowing from the Social Insurance Fund, with all future surpluses to be deposited into the Fund's account for investment purposes. A separate independent authority will be established to manage those investments, modelled on the framework governing the hydrocarbon fund and based on international governance standards. The new authority is expected to begin operating on 1 January 2028, with the existing arrangements continuing in the interim.
On the state's existing debt to the Social Insurance Fund, estimated at around €12 billion, Mousiouttas said repayment will be gradual and linked to public finances. "The state will make repayments when its debt falls below a specific percentage of GDP, to be agreed," he said. Annual repayment instalments will be channelled into the same investment account and managed within a framework of low and measured risk. Social partners will have an advisory role in the Fund's governance.
The 12% actuarial penalty
On support for low-pension recipients, Mousiouttas said a new arrangement has been agreed with the Deputy Ministry of Social Welfare under which beneficiaries will receive a single consolidated payment, with the administrative coordination between the two ministries handled internally. This means recipients will only need to apply once to receive all benefits to which they are entitled.
On the 12% actuarial reduction applied to early retirees, the minister confirmed that the government's position is that this penalty will be reduced, though he did not specify by how much. He also said discussions on the second pillar, the provident funds, are continuing in parallel, describing them as an integral part of the overall pension planning framework.
Content before timetable
SEK secretary-general Andreas Matsas said the union's core concern is ensuring the conditions are in place for a comprehensive reform that delivers adequate pensions, adding that at present this does not appear achievable. He argued that the reform must be linked to the second pillar, the provident funds, and warned that a piecemeal approach would not produce a beneficial outcome. SEK, he said, cannot accept the submission of a bill to parliament without a clear framework for the management of the Social Insurance Fund and without the second pillar having been addressed. Matsas said SEK would prefer a delay of a few months over a rushed process, and warned that the reform's underlying philosophy could be undermined once it enters the political arena of parliamentary debate.
PEO secretary-general Sotiroula Charalambous said her union had deliberately chosen to withhold its final position until it has the full picture of the reform before it, with its verdict to be based on a single overriding criterion: whether the reform delivers income to pensioners that keeps them out of poverty. She said the final proposal on pension increases had not been put before the unions, and that the 12% actuarial reduction remains a point of contention, with PEO's own proposals submitted for consideration. "It is not a question of timing, it is a question of content," she said, adding that it would be in the interest of both parliament and the government to secure the broadest possible consensus from employers and workers before proceeding.
The next meeting of the Labour Advisory Body is scheduled for 15 June.
Source: CNA
