Cyprus government announces major pension system reform

The Cypriot government is planning a comprehensive reform of the pension system, scheduled for implementation on January 1, 2027. Labor Minister Marinos Mousiouttas stated that the reform addresses a system that has remained largely unchanged since 1980. Key proposals include increasing all pensions, with a focus on raising the lowest ones, and consolidating various benefits into a single payment. The government intends to end the practice of borrowing from the Social Insurance Fund and repay the €12 billion debt owed to it. The reform also introduces automatic registration for the Social Insurance Fund starting at age 16 and grants social credits to stay-at-home parents and informal caregivers. Furthermore, the 12% penalty for those retiring at age 63 will be reduced based on years of service and the nature of the profession, such as for manual labor. The second pillar of the reform aims to transform the Provident Fund into a stable mechanism for supplemental income.