The government is moving closer to submitting its long-awaited pension reform bill to the Cabinet, but several of the most contentious elements of the overhaul remain unresolved following the latest meeting of the Labour Advisory Body.
Despite ongoing consultations between the Ministry of Labour and social partners, Wednesday's discussions did not produce any new agreed measures. Labour Minister Marinos Mousiouttas acknowledged the challenges ahead, stating that "the final measures are the most difficult".
Outstanding pension reform issues
According to information reported by Politis, several key areas remain under discussion, including:
- The 12% actuarial reduction applied to early retirement pensions.
- Benefits for low-income pensioners.
- Widow's and widower's pensions.
- Reform of provident funds.
Officials and social partners are continuing efforts to bridge differences before the bill reaches Cabinet.
Pension increases and retirement eligibility
Participants discussed possible changes to the way pensions are increased and adjusted, with a focus on ensuring that any new system does not slow the current pace of pension increases.
The meeting also examined eligibility requirements for individuals seeking retirement at age 63, including the number of insurance units required to qualify for pension benefits. Concerns were raised that any revised framework should not place applicants in a less favourable position than under the current system.
Contributions after age 65
Another issue under review involves pension recalculations for people who continue working and contributing to the social insurance system beyond the age of 65.
Discussions centred on whether pension adjustments should take place at 65 or 67, and how additional contributions should be reflected in the supplementary element of pension payments.
Questions were also raised about the additional social insurance rights available to workers aged 65 to 67 who continue paying contributions, particularly in relation to unemployment, sickness and redundancy benefits.
Widow's pensions and family support
The meeting examined proposals concerning widower's pensions and a planned reduction from 100% to 75% regarding the treatment of a dependent spouse in the basic pension component.
Participants stressed the need to assess the impact of any changes, particularly in relation to family support.
Discussions also covered the treatment of credited insurance periods, including time spent in education, military service, illness and unemployment, which under current proposals would not count towards pension entitlement qualification.
Social insurance contributions on dividends
The proposed introduction of social insurance contributions on company dividends was also discussed.
According to the report, one proposal would limit the calculation of contributions to two insurance units, equivalent to approximately €23,000, without imposing additional taxation or deductions.
A separate proposal examined further limiting the combined calculation of salaries and dividends to one insurance unit, approximately €11,480 annually.
Sustainability of the Social Insurance Fund
Particular attention was given to the long-term sustainability of the Social Insurance Fund.
Discussions focused on the funding of new expenditure, state guarantees for pensions and the repayment of government debts owed to the fund.
Concerns were reportedly expressed about proposals that could see expenses currently financed by the Republic's Consolidated Fund transferred to the Social Insurance Fund, with calls for clear limits to be established.
Participants also discussed legislative safeguards to ensure state financial support should sustainability concerns arise in the future.
Digital system under consideration
The reform package could also include the development of a modern digital social insurance system.
The proposal would allow insured individuals to access information on their contributions, insurance rights and estimated pension entitlements, potentially through a mobile application.
Future integration with other pension pillars was also discussed.
Provident fund reform continues
On provident funds, the Ministry reiterated its objective of reaching a framework agreement with social partners to establish the main principles of reform.
Employer organisations and trade unions have submitted or are preparing their positions, with unions supporting a universal approach that would protect existing funds, while employers favour a voluntary model and argue that any reforms should also apply to existing schemes.
Bill expected to reach Cabinet soon
Mousiouttas told the Labour Advisory Body he hopes the pension reform bill will be submitted for approval at the next Cabinet meeting.
He said the Legal Service is expected to complete its legislative review by Monday, after which the government aims to seek Cabinet approval before forwarding the legislation to the House of Representatives.
"We are entering the final stretch," the minister said, adding that "the final measures are the most difficult."
