The government’s priority regarding pension reform is to proceed with the first phase, which αφορά the first pension pillar, namely the Social Insurance Fund (SIF). This phase focuses on improving low pensions, incorporating benefits currently paid by the Deputy Ministry of Social Welfare, and revising the governance framework of the SIF.

As Brief writes, these issues were discussed yesterday during a two-hour meeting between the Minister of Finance, Makis Keravnos, and the Minister of Labour and Social Insurance, Marinos Mousiouttas. During the meeting, the two ministers outlined, among other matters, the framework within which dialogue on pension reform will continue with the two social partners—employers and trade unions.

The two ministers agreed that, in consultation with employer and trade union organisations participating in the Labour Advisory Board (LAB), a roadmap should be established, based on the procedures that must be followed, so that the relevant draft legislation can be submitted to Parliament before the end of the year.

Keravnos and Mousiouttas also exchanged views on the second component of pension reform, which concerns the second pension pillar, namely Provident Funds.

On this matter, there is a relevant EU directive that the Cypriot government cannot bypass.

However, it is the shared assessment of both members of the Council of Ministers that it would be difficult to include the second pension pillar in the first phase of the reform.

The Ministers of Finance and Labour consider that if the discussion on Provident Funds were introduced during the first phase, the process would become lengthy and complex, and that it would be unfair not to prioritise the improvement of low pensions, an issue that affected pensioners have been waiting to see addressed for a considerable period.

On this point, Marinos Mousiouttas limited his comments to stating to Brief that indeed, “what takes precedence—and we believe both social partners also want this—is above all the improvement of low pensions, which,” as he noted, “is a demand of society.”

When asked about the controversial 12% actuarial reduction, Mr Mousiouttas said that this issue forms part of the matters to be discussed within the first phase of the reform.

The Minister of Labour did not elaborate further, noting that the issue will be the subject of an exchange of views with employer and trade union organisations at the upcoming meeting of the Labour Advisory Board, scheduled for early February.

Speaking to Brief, Finance Minister Makis Keravnos emphasised that the state’s primary concern—being the largest employer—is to ensure that pension reform does not result in a prohibitive cost for public finances.

“We must all be particularly careful. Yes, to pension reform, but at the same time we must weigh the factor of our financial capabilities,” he said.

He added that the views of both ministers are aligned regarding the priority of improving low pensions, “taking into account the sustainability of the Social Insurance Fund.”

Regarding the revision of the investment policy of the SIF’s reserves, both the Minister of Finance and the Minister of Labour agree that revising the existing policy is essential in order to secure better returns for the fund.

The management of the investment policy will be undertaken by independent advisers, specialising primarily in safe and efficient investments.

It is noted that the meeting between the two ministers was also attended by ILO actuary Kostas Stavrakis, Dionysis Dionysiou, Head of the Directorate for Economic Policy and European Affairs at the Ministry of Finance, as well as other senior officials.

According to a report by the Cyprus News Agency, the President of the Republic also discussed pension reform yesterday with the two competent ministers.

Specifically, the President was briefed on the objectives of the reform, which are the adequacy and increase of pensions, in conjunction with the long-term sustainability of the Social Insurance Fund.

This meeting took place yesterday morning, prior to the meeting between the two ministers at the Ministry of Finance.