An ambitious timetable for advancing legislation related to the reform of the pension system was presented by Labour Minister Marinos Mousiouttas during yesterday’s session of the House Labour Committee.

As Brief reports, Mr Mousiouttas assured members of the Parliamentary Committee that the government’s goal is to submit, no later than June, the bills concerning the first pension pillar, namely the Social Insurance Fund (SIF).

The social dialogue with employers’ and trade union organisations on pension reform has been reactivated, and the minister expressed hope that the issue will progress accordingly through the institutional process of the Labour Advisory Board (LAB). He noted that the forthcoming bills will include, among other things, the contentious issue of the 12% actuarial reduction—referred to as a “penalty”—imposed on those who retire from the age of 63.

The Labour Minister did not provide further details on the matter, stating that it remains subject to ongoing social dialogue.

He referred to the government’s intention to modernise the investment policy relating to the reserves of the Social Insurance Fund, in order, as he said, to create future prospects.

He added that within the next few weeks the government’s final position will be formulated and submitted to the social partners.

The Labour Minister also stated that, within the framework of the bills for the first pension pillar, the state’s social policy aimed at improving low pensions will be taken into account.

Asked about the delays observed in implementing the pension reform, Mr Mousiouttas pointed out to Committee members that 12 meetings have already taken place between the social partners and the actuary of the International Labour Office (ILO).

He argued that, to date, the social partners have not formally submitted their positions.

He further noted that in early February he will convene a meeting of the Labour Advisory Board, during which a comprehensive briefing on all pension-related issues will be provided.

He clarified that, so far, the ILO actuary has carried out an analysis of the first pension pillar, namely the Social Insurance Fund.

Regarding the reserves of the Social Insurance Fund, Mr Mousiouttas stated that 95% of the Fund’s inflows are deposited in the Republic’s Consolidated Fund, earning an interest rate of 2.16%.

The remaining 5% is deposited in banking institutions, following approval by the Ministry of Finance.

With regard to pension pillar “II,” which αφορά provident funds, the minister referred to the differing approaches taken by the social partners on the issue.

He nevertheless expressed the view that consensus will eventually be achieved.

Mr Mousiouttas noted that consultations on provident funds are expected to take time, adding that the issue is likely to be placed on a clear path towards resolution within the next two to three years.

During the Committee session, reference was also made to the extension of collective agreements in the private sector, based on the relevant EU directive.

The Labour Minister pointed out that the EU directive concerning this institution and wage adequacy is currently being discussed by the social partners within a dedicated technical committee.

At last Monday’s meeting, a presentation was made of the draft bill, which fully complies with the provisions of the directive issued by the European Union to all member states.

The directive was issued on 19 October 2022, and the Republic of Cyprus should have already advanced its implementation since early 2023.