Three months before the government's target for introducing pension reform from the new year, discussions within the Labour Advisory Body show that significant disagreements remain over key aspects of the proposed legislation.
The latest meeting highlighted the distance between the positions of the social partners, with trade unions and employers' organisations maintaining reservations while the Labour Ministry seeks areas of agreement before submitting the bill to Parliament.
Union concerns intensify
SEK Secretary-General Andreas Matsas told Politis that concerns over the pension reform are intensifying.
“Unfortunately, the negative impact on those who retire after the transitional period will be greater, while there is also a risk that they will pay increased contributions,” he said.
Matsas also stressed that discussions have not been completed and that the government is not ready to submit the bill. He pointed to the need to advance the second pillar of the pension system to ensure pension adequacy.
PEO Secretary-General Sotiroula Charalambous said a fundamental principle for the union is that the reform should not include provisions that make the conditions for establishing pension rights stricter or adversely affect them.
She said the proposed transfer of credits from assimilated contributions to subsidised or notional insurance contributions would negatively affect certain categories of insured people, including students and mothers. Under the proposal, these periods would not count towards establishing entitlement to a pension at 63, or towards widow's or incapacity pensions.
The proposed increase in the number of insurance years required to retire at 63, from 33 to 38 years, has also prompted strong objections.
Unions raise further pension demands
Trade unions are also asking for the allowance provided to low-income pensioners to be set at a level approaching the poverty threshold.
They argue that the Social Insurance Fund should not bear the cost of the state's social policy and are calling for a resolution concerning men whose wives died before 2018 and who are currently not entitled to a widow's pension.
PEO also remains dissatisfied with the 12% actuarial reduction applied to people who choose to retire at 63.
The union said that under the new formula proposed for the basic pension, someone retiring at 63 would receive a pension 15.4% lower than someone retiring at 65. It also said discussions should address those who are required to retire at 63.
Employers consider their positions
Employers' organisations have yet to submit their final positions.
“The discussion is progressing, further clarifications have been provided in response to questions, as well as financial examples. OEB is processing all the data so that in the coming period it can take a position on all aspects of the proposal,” Lena Panayiotou, assistant director-general of the Cyprus Employers and Industrialists Federation (OEB), told Politis.
Emilios Michael, deputy secretary-general of the Cyprus Chamber of Commerce and Industry (CCCI), said the Chamber's positions will be finalised following a meeting of its executive committee on 13 October.
Ministry to provide additional data
According to information obtained by Politis, the Labour Ministry is expected to provide social partners with additional data and actuarial examples showing how the basic pension would develop under both the existing system and the proposed new model.
European practices concerning the number of insurance years required for retirement at 63 are also expected to be examined.
Labour Minister Marinos Mousiouttas said discussions will continue throughout October and that the government remains open to changes, even after the bill is submitted to Parliament.
The minister also said a roadmap for the second pillar has been prepared.
