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25 June, 2024
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Dept of Labour: 'Our social security fund is sound'

The statement was made today by the Department of Labour as parliament approved new pension schemes for public servants hired after 2011

Source: CNA

According to the Ministry of Labour and Social Insurance, the General Social Insurance Plan's most recent actuarial study shows that the amendments made up until 2012 ensure the long-term viability of the Social Insurance Fund and that, through the year 2080, the fund's annual revenues will cover its annual costs.

In response to Nikos Christodoulides' comments that the pension system is a "ticking time bomb," the Ministry of Labour and Social Security responded with a statement saying, "the pension system is certainly a challenge, which the Ministry of Labour and Social Security is called upon to manage in the context of the Government's broader social policy, with the aim of safeguarding the rights of all workers, but also of our retired citizens".

The new pension scheme will be funded by a 5% contribution per month by both employers and employees.

The statement continued by emphasizing that the Ministry of Labour regularly consults and communicates with the International Labour Office (ILO) and that the office is eagerly anticipating the results of a study regarding the reform of the pension system in Cyprus. According to the report, "the study takes into account the need to ensure adequate pension income to achieve the key objectives of addressing pensioner poverty, solidarity and equity between and within generations, ensuring the long-term sustainability of pension provision, and the efficiency of the system to reduce disincentives to work."

The International Labour Office will present the study's findings, according to the Ministry of Social Security, before the year is out. Following study, evaluation, and discussion with the Social Partners, a plan for the reform of the pension system will be created.

Meanwhile, the Cyprus Parliament approved on Friday two bills establishing a new professional pension scheme for the public and wider public service, including local authorities, providing pension coverage to thousands of public sector employees hired after October 1 2011, including casual staff.

The two bills were approved unanimously with MPs speaking of a historic day, noting that the state should address inequalities in the pension system between the public and the private sector.

The new pension scheme will be funded by a 5% contribution per month by both employers and employees.

Christiana Erotokritou, President of the parliamentary Committee of Finance said the new scheme creates a new state of affairs for the employees of the wider public sector.

“This is a step towards the right direction,” she added.

Erotokritou said the committee discussed the two bills in depth and brought amendments with the consensus of the executive.

She highlighted that under one amendment the pension fund’s reserves will be monitored by a Committee composed of the Finance Minister, the Permanent Secretary of the Finance Ministry, the Auditor General and the Finance Ministry’s Treasurer who will appoint external advisors over the fund’s investment policy.

She also noted that any change in the contribution percentages will be governed by regulations to be tabled to the Parliament as opposed to a decree of the Finance Minister, as stipulated in the initial bill.

MPs criticised the fact that the pension scheme does not cover approximately 180 employees that were hired in 2011 but retired, with the government assuring that it will cover these employees in a one-off allowance.

However, they stated that they could not amend the bills as this would violate the Constitution, stipulating that the Parliament cannot enact laws increasing public expenditure. They stated that they will monitor in case the new government would not honour this commitment.

Furthermore, MPs said that new regulations on the National Guard will cover non-commissioned officers not covered by the scheme.

Cyprus  |  pension

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