Cyprus Finance Minister signals potential pension contribution increases amid upcoming critical union meeting
Cyprus’s Finance Minister, Makis Keravnos, has indicated that pension contributions are likely to rise due to factors such as higher employment, wage increases, and the cost-of-living allowance (COLA), complicating the outlook following recent Labour Minister comments on potential future contribution hikes. This development comes ahead of a key Labour Advisory Body meeting scheduled for Thursday, where a 12% actuarial penalty related to pension reform will be the primary topic of discussion.
The proposed pension reform includes scenarios where, after a five-year implementation period, a new actuarial study would reassess the Social Insurance Fund’s sustainability. Should the findings be unfavorable, a contribution rate increase may be considered. Labour Minister Marinos Moushouttas has highlighted that although a previous attempt to reduce high pensions was constitutionally rejected, future contribution adjustments could be necessary depending on the Fund’s condition.
The Thursday meeting is set to revisit the 12% penalty proposal, with union counter-proposals being discussed and costed by the Labour Ministry and Finance Ministry actuaries. Finance Minister Keravnos plans to attend upcoming advisory meetings to provide detailed scenarios and clarify how the pension reform will be funded within state capabilities, emphasizing that any changes will avoid endangering the Fund or requiring new taxation.
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