The government has made three changes to its pension reform bill, bringing it closer to the positions of the social partners, meaning trade unions and employers. Labour Minister Marinos Moushouttas announced the changes on Monday after a meeting of the Labour Advisory Board. He said the government still aims to introduce the new system on 1 January 2027, provided Parliament passes the bill within 2026.
The three changes
1. Pension increases paid over three years instead of five. Under the revised bill, increases in pensions will be paid gradually over three years rather than five. Pensioners will receive 30% of the increase in the first year, 30% in the second year and the remaining 40% in the third year.
“It was one of the suggestions that had been put forward. It was one of our intentions too, and when we judged that it could be implemented, we announced it today to the social partners,” Mr Moushouttas said.
2. A longer transition period, from five to 15 years. The transition period between the old and the new pension system will be extended from five years to 15 years. The minister said this appears to resolve a concern about a possible increase in contributions.
In practice, this means people will not lose out under the new system during that period. “So for the next 15 years, if a comparison of the old and the new system shows that the old system appears better for someone, the old system will apply to the pensioner or future pensioner,” the minister explained.
3. Better conditions for widowhood and disability pensions. The conditions for receiving widowhood and disability pensions will also improve. The minister said this “follows as a consequence of the extension of the transition period.”
“One step closer” to agreement
Mr Moushouttas described the agreement on the three points as progress. “I believe that with these three points we have covered so far, we are one step closer than we were a week ago,” he said.
“The intention is, by also examining the other suggestions made by the social partners, to get even closer,” he added.
He noted, however, that not every request can be met. “You understand that there are issues we will not be able to touch, either because of philosophy or because that is how our proposal has been built. But our intention is, wherever we can, to make improvements to the bill so that the positions of the government and the social partners come even closer,” he said.
What happens next
The minister made clear that the talks will not hold up the bill. “This does not change the intention that existed and still exists, that the bill will soon go to the Council of Ministers and then to Parliament,” he said.
He said legal vetting of the bill by the Law Office is being completed. “As soon as we have the bill in its new form, it can proceed to the Council of Ministers. The basis exists, and minor adjustments are being made depending on what is decided at the Labour Advisory Board,” he said.
Talks with the social partners can continue on Monday and Thursday. If a further change is agreed after the bill has been submitted, “there will be scope to incorporate it into the bill already submitted to the House of Representatives,” the minister said.
“So dialogue and discussions continue until the moment the debate begins in Parliament. And there too, it goes without saying, our primary interlocutors are the social partners. During the debate in Parliament we will again have the flexibility to consult the social partners, in addition to the parties that make up the competent committee,” he said.
The target date of 1 January 2027
Mr Moushouttas said the aim is for the new system to start on 1 January 2027 “so that people can feel the changes that will come.”
“For it to start being implemented in 2027, the condition is that it is passed by Parliament within 2026. Now, if there are any technical difficulties after it is passed, there are ways, and we will work through them,” he said.
“We are trying, while listening to their own suggestions, to adapt our proposal so as to ease any concerns that existed. I believe we have largely achieved that today. Of course, we are not finished. We have Thursday, when we will look closely at the next suggestions they have made,” the minister said.
Provident funds and investment policy
The pension reform is one of three related bills. The other two concern provident funds, known as the second pillar, and investment policy.
On these, Mr Moushouttas said “it is clear that there is no legislation today.” He explained that “what is being asked for is, let me call it, a gentlemen’s agreement between the state and the partners, which will set out the general lines as well as the timetable for implementation.”
“The pension reform bill is the most advanced of all, but at the same time we are discussing the others, with the aim of reaching conclusions on them as soon as possible. Because yes, a comprehensive reform includes all three, but we do not think one should become an obstacle to the others,” he added.
Why the bill has not yet been submitted
Asked about the delay in submitting the bill, the minister said “the effort was and is to achieve the greatest possible convergence with the social partners,” who submitted their positions last Thursday.
“They all came with suggestions, and there are now answers to these official suggestions. Some will be positive, for example what I mentioned today. Some will be negative, and some need further work, after which there may be something we can adopt,” he said.
“We do not claim to hold the absolute truth. We also need the help of the social partners. We are obliged to carry out the reform taking into account the sustainability of the Social Insurance Fund, of course the increase in pensions, and the sustainability of public finances,” he noted.
The role of the Labour Advisory Board
Mr Moushouttas said the government has no intention of bypassing the Labour Advisory Board. “At no point did it cross our minds that we want to go to Parliament and ignore the Labour Advisory Board,” he said.
“But on the other hand, we in no way want the timetables to change, so that the pension reform can be implemented,” he concluded.
