Cyprus to launch major pension reform in 2027

Cypriot Labor Minister Marinos Mousiouttas presented the main pillars of a large-scale pension reform set to take effect on January 1, 2027. According to him, the social insurance system has not undergone comprehensive changes for 46 years and requires deep modernization.

One of the key elements of the reform will be an increase in pensions, primarily for low-income recipients. At the same time, there are plans to return approximately 12 billion euros of government debt to the Social Insurance Fund and end the practice of using it to finance other state needs.

The reform also includes the introduction of new social mechanisms. These include automatic registration in the social insurance system from the age of 16, credit for periods of study and military service, and recognition of the contribution of housewives and informal caregivers through a points-based system. Additionally, a reduction in the penalty for early retirement at age 63 is being discussed, which may depend on years of service and the nature of the work.

According to the minister, pensions will be significantly increased; however, their level will remain below the minimum wage but substantially higher than current payments. Separately, there are plans to consolidate fragmented benefits into a single pension transfer to increase transparency and citizens' income.

The second part of the reform concerns the labor market and the transformation of the Welfare Fund into a mechanism for additional stable income for citizens.