Pension tweaks to wait till after reforms if no consensus

If consensus is not reached on the reduction of pensions for those retiring before the age of 63 within six months, the issue will be postponed till after the reform of the pension system is completed, Labour Minister Yiannis Panayiotou said on Tuesday.

Speaking before the House labour committee, Panayiotou said his ministry’s intention was to continue talks with social partners for a mutually acceptable proposal.

The aim is an actuarial reduction of pensions for those retiring early and abolishing the 12 per cent penalty.

If a proposal is not reached, the labour ministry will focus on the reform of the pension system, postponing the discussion for an actuarial reduction for a later date.

Panayiotou had been invited to the committee to brief MPs on legislative regulations promoted for next year and specifically referred to the cost of living allowance and pension reforms.

He set an “ambitious aim” for bills to be tabled by the end of 2025 and to be voted on before the 2026 parliamentary elections.

Replying to MPs, Panayiotou said the actuarial reduction could not be included in the pension reforms.

Panayiotou said that, had the ministry’s proposal been accepted by the trade unions, today 15,000 retirees, or 30 per cent of those affected by the 12 per cent penalty, would be enjoying an €800 relief annually, which for some is a whole month’s pension.

The minister appeared optimistic that the bills would be ready by the end of 2025, despite having described this as an “ambitious aim”.

He said next week he would submit a proposal to the cabinet for a ministerial committee to coordinate the process.

Panayiotou said his optimism was fueled by his cooperation so far with the House labour committee and thus looked forward to a constructive outcome.

He added that the more the MPs knew about the progress of the talks on the pension bills, the better, as they would be more prepared ahead of the discussion at the plenary.

Asked by MPs when the state would start paying back what it owed to the social insurance fund in the framework of paying off domestic debts, Panayiotou said the rationalisation of the fund’s investment policy would include the dispersion of investments in other safe options, beyond investments in the state.

Panayiotou said there was “no magic way” for the money borrowed by the state to be returned to the fund and pensions suddenly rising.

The aim, he said, was for the fund to not depend exclusively on the amounts that would be deposited by the state.

He also said that if all went well, the extent of domestic borrowing would be reduced before 2027.