The need for pension reform to lead to a substantial improvement in retirees’ incomes, address existing distortions, and at the same time safeguard future generations, was emphasized by AKEL General Secretary, Stefanos Stefanou, following a meeting with the Minister of Labor and Social Insurance, Marinos Mousiouttas, on Monday afternoon.
The Minister noted that more could be done, while emphasizing the existing financial constraints.
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Mr. Stefanou stated that AKEL is ready for a substantive discussion on the reform, expressing the hope that the ongoing dialogue with social partners will lead to decisions.
As he said, the primary goal of the reform should be to ensure adequate incomes for retirees so that they can meet their needs, particularly during a period of rising living costs.
“A very large majority of retirees today, due to their low incomes, are truly struggling immensely in this era of high prices and great pressure,” he said.
According to the AKEL Secretary-General, ensuring adequate incomes should come from a substantial increase in pensions through the Social Insurance Fund, combined with a strengthening of the state’s social support policies for retirees.
Mr. Stefanou also raised the need to address issues that AKEL considers to be distortions of the existing system, specifically mentioning the 12% actuarial reduction for retirement at age 63 and the widow’s pension for men whose wives passed away before 2018.
He also made special mention of the Provident Funds system, noting that its expansion should be considered as part of the overall pension reform. As he stated, approximately 27% of workers in Cyprus are currently covered by the system, a percentage lower than the European Union average.
The AKEL Secretary-General also referred to the central government’s debt to the Social Insurance Fund, which he estimated at around €12 billion. As he said, the government should gradually begin repaying the Fund in order to build a real reserve, which, through an appropriate investment policy, will be able to generate additional revenue and strengthen the sustainability of the TKA.
He also emphasized that decisions regarding the reform must safeguard future generations so that they can receive pensions in the future, without any reduction in pension benefits and without an increase in contributions.
For his part, the Minister of Labor and Social Insurance, Marinos Mousiouttas, described the discussion as constructive, noting that he presented to the AKEL leadership the rationale behind the government’s proposal, the specific elements of the reform, the priorities that were set, and the total cost.
As he said, during the meeting, the reasons for the choices included in the proposal were explained, as well as why certain issues were not included in it. As a prime example, he cited the widow’s pension for men, an issue raised by AKEL.
The Minister noted that, despite specific differences of opinion, there is a shared goal of improving the standard of living for both current and future pensioners. He stated that more could be done, while emphasizing, however, the existing financial constraints. “But the numbers are there, and they are stark,” he said, adding that an analysis of the economic data shows that the available leeway does not permit the implementation of everything the government itself might wish to do.
Mr. Mousiouttas assured that the government will continue the dialogue with both AKEL and the other political parties, as well as with social partners, with the aim of reaching the broadest possible consensus before the reform is submitted to Parliament. “The Social Insurance Fund belongs to previous generations, to us, and to future generations, and we must safeguard it as the apple of our eye,” he said.
He added that, alongside ensuring the sustainability of the Social Insurance Fund, public finances must also be safeguarded so that the economy can continue to support improvements in citizens’ standard of living.
The Minister noted, that communication and dialogue with AKEL will continue as the process unfolds, noting that the goal is to hear all viewpoints before the proposal is finalized.
Source: CNA
