Citizens have begun taking action regarding the amount their pensions will be, while the social partners are scrutinizing the amended bill word for word.
According to the government’s proposals, pension increases will be paid out gradually over a five-year period.
ΣΧΕΤΙΚΑ ΑΡΘΡΑ
In the first year, retirees will receive 40% of the total increase to which they are entitled. In the second year, they will have received a total of 60%; in the third, 70%; in the fourth, 80%; and in the fifth, 100%.
For example, if the total increase a retiree is entitled to is €100 and the reform takes effect in January 2027, their pension will increase by €40 per month in the first year.
In 2028, another €20 will be added, bringing the total increase to €60 per month.
In 2029, another €10 will be added, bringing the total increase to €70.
In 2030, another €10 will be added, bringing the total to €80.
And in 2031, the final €20 will be added, bringing the total increase to €100 per month.
For current pensioners of the Fund, the draft bill stipulates that those receiving a monthly pension of 600 euros will receive a minimum guaranteed increase of 30 euros starting in the first year.
SEE ALSO: Pensions in 18 Examples: How Much Will Your Pension Increase Based on Your Salary and Years of Service
“A retiree today who receives 504 euros, had an annual income of 11,500, and worked for the full duration of their career—47 to 49 years. They do not receive the supplement because they do not meet the criteria; this person will receive a total of 250 euros, meaning the 500 will become 700.”
Marinos Mousiouttas – Minister of Labor
In the technical note accompanying the reform proposal, the Ministry uses six levels of annual earnings—based on 2024 figures—to illustrate its examples.
It considers the following to be low incomes: €11,104 per year, corresponding to one insurance unit.
Medium income: €22,208 per year, corresponding on average to two insurance units.
Medium-to-high income: €33,312 per year, corresponding on average to three social security units.
High incomes: €44,416 per year, corresponding on average to four social security units.
Very high incomes: €55,520 per year, corresponding on average to five insurance units.
SEE ALSO: Mousiouttas analyzes: What increase will two retirees receiving €3,050 get, and what will happen to the small “tsiekoudin”?
The amount of one’s pension will be determined by the number of insurance units accumulated by the time of retirement, as well as by the number of years of participation in the system.
The minimum total income, including the allowance for single low-income retirees, is €710, and the maximum is €834. Therefore, social benefits will be reduced in proportion to these increases.
“Under no circumstances will there be a retiree who receives a pension and a small supplementary allowance who, as a result of the reform, will receive less than they did before the reform.”
Marinos Mousiouttas
READ ALSO: The first reading of the pension reform: The concerns of employers and employees and the “bone of contention”
Rentier Class
The amended bill will require a new group of citizens—who are not employed—to pay contributions.
“20B. (1) Any income earner who is a citizen of the Republic of Cyprus or a member state and who has his or her habitual residence in the areas controlled by the Government of the Republic shall pay a contribution at a rate of 15.82% of their income for each year.”
Bill
The contribution rate will increase to 17.1% in 2029, to 18.5% in 2034, and to 19.6% in 2039.
SEE ALSO: Increases for 123,000 retirees: What the pension reform provides for regarding the 12% penalty
See the report by Kleio Vourkou:
