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The government is taking a fresh look at the controversial 12% pension cut, a move that could directly affect thousands of future retirees, as negotiations over Cyprus’ long-awaited pension reform continue.
Labour Minister Marinos Moussiouttas said Monday that alternative solutions to the reduction are now being prepared and will be presented in upcoming meetings with unions and employers.
The issue has become one of the biggest sticking points in the reform talks, with many workers worried about how much money they could lose if they retire early.
Why the 12% cut matters
The reduction currently applies as an actuarial penalty in certain pension cases, meaning some people receive smaller monthly payments if they retire before reaching the full retirement age.
Now, the government says it is exploring different ways to handle the measure as part of wider changes to the pension system.
“It’s part of the discussion, and new options will be examined,” the minister said after a meeting of the Labour Advisory Body.
An earlier proposal that would have reduced some higher pensions has already been scrapped, and officials are waiting for updated recommendations from an actuarial study expected within days.
A big reset for the pension system
The government describes the reform as a long-needed overhaul designed to make pensions fairer and more sustainable.
The goals include:
- boosting low pensions,
- improving overall benefits,
- and narrowing gaps between men and women in retirement income.
If everything stays on schedule, the first reform bill will be submitted to Parliament by June 2026, debated later in the year, and implemented in 2027.
Changes coming step by step
Officials say the overhaul won’t happen overnight.
The first phase will focus on the core state pension system. A second phase — involving additional pension structures — is expected about three years later, mainly due to technical and administrative challenges.
More workplace changes on the way
At the same time, the Labour Ministry is preparing a series of related measures affecting workers and businesses, including:
- a new plan allowing people and companies to repay overdue social insurance contributions over four years,
- legislation aimed at strengthening collective labour agreements,
- stricter workplace safety training rules,
- and expanded parental leave rights for foster parents.
For now, the spotlight remains firmly on the 12% pension cut, a decision that could determine how comfortably many Cypriots retire in the future and one that is likely to keep the debate alive in the months ahead.
