On 16 February, the Labour Advisory Body will convene under Labour Minister Marinos Mousiouttas, with the pension system as its sole agenda item.

In addition to the two social partners, employers and trade unions, the members of the Technical Committee for the Social Insurance Fund have also been invited and will attend, along with Kostas Stavrakis, actuary of the International Labour Office.

Procedurally, an extensive briefing is expected regarding the reserves of the Social Insurance Fund, followed by an exchange of views on investment policy, with the main focus on improving returns.

Specifically on the issue of investment policy, there are various thoughts and proposals from both the Ministry of Finance and the Ministry of Labour, which will be put on the table of the Labour Advisory Body for discussion and recommendations.

One of the proposals will be that the management of investment policy should be undertaken by independent advisers, specialists mainly in safe and high-yield investments.

This issue had also been discussed at a meeting of the two competent ministers held at the Ministry of Finance in mid-January.

Marinos Mousiouttas had stated to Brief that one of the proposals he will put forward will be the setting of a roadmap, according to which the social dialogue should be completed within 2026 and the relevant bills submitted to the House of Representatives for approval.

It is the view of the Ministry of Labour that the reform of the pension system should be promoted in two phases.

The first phase will concern the first pillar of the pension system, which is social insurance, the improvement of low pensions, and the incorporation of benefits paid by the Deputy Ministry of Social Welfare.

As regards the second pension pillar, which is provident funds, it is the view of the Ministry of Labour that this should be addressed within the framework of the second phase.

The trade union movement disagrees with the process proposed by the Ministry of Labour.

According to information from Brief, the trade unions will demand that the reform of the pension system be promoted to the legislative branch as a single package.

Employer organisations would not want, at this stage, the issue of promoting provident funds to be raised.

On the other hand, the Ministry of Labour believes that if the discussion on provident funds is included in the first phase, the process will become time-consuming and will delay the promotion of bills related to improving low pensions.

The contentious issue concerning the actuarial reduction of 12% will be left to be discussed at a future meeting of the Labour Advisory Body.

The positions of the social partners and the Ministry of Labour remain diametrically opposed.

The Ministry of Labour is looking to the presentation by the actuary of the International Labour Office, who will present various scenarios to the social partners, so that employers and trade unions can proceed on the basis of the actuary’s recommendations.

Makis Keravnos has stated on various occasions that any decision taken regarding the revision of the 12% actuarial reduction (“penalty”) should not result in prohibitive costs for state finances.

The issue of pension reform was also raised at a meeting of President Christodoulides with the Ministers of Finance and Labour about two weeks ago.

The President gave instructions to the two ministers that the pension reform should be implemented as of 1 January 2026.