Cyprus unveils pension reform with up to 50% increases for lowest earners: largest overhaul since 1980

Cyprus’ Labour Minister Marinos Mousiouttas presented a sweeping pension reform on Wednesday that would raise payments for all 123,000 pensioners, with the lowest earners receiving increases of up to 50%. Under the proposal, a pensioner currently receiving €436 would see their payment rise to €702, while one receiving €508 would get €764. Higher earners would see smaller gains, with a pensioner on €2,129 receiving €2,168 and one on €2,540 getting €2,580 .
The reform also reduces the 12% actuarial penalty applied at age 63, granting relief covering half of the period—up to nine months—of the reduction applied to the basic pension. This relief would apply to existing pensioners and future retirees up to 2031, with the adjustment remaining in place for life. Funding for the increases would come from broadening the financing base and introducing a new contribution obligation for individuals with investment income, including dividends, interest, rent, and royalties. The rule applies to Cyprus or EU citizens, as well as third-country nationals covered by EU Regulation 883/2004, resident in government-controlled areas, and only up to the annual amount of basic insurable earnings .
Mousiouttas confirmed that every pensioner would receive a pay boost, calling the plan the largest reform since 1980. The proposal was presented to social partners during a Labour Advisory Body meeting and will now proceed to Parliament as a bill for further debate and voting .
In Romania, fiscal constraints took center stage as Daniel Dăianu, president of the Fiscal Council, warned that the country risks losing billions in remaining EU recovery funds under the PNRR if reforms, including the long-delayed salary law, are not finalized. Dăianu emphasized the economic pressures from successive crises since 2020, stating that Romania’s budget was built on these EU funds and that delays could jeopardize ongoing projects. The salary law, which he described as addressing major injustices in public sector pay, has been postponed until the last moment, he said during an interview with Digi24 .
Separately, sources reported that the European Commission has rejected the current form of Romania’s salary law, putting €770 million in PNRR funds at risk. President Nicușor Dan was set to meet coalition leaders at Cotroceni Palace on Thursday to discuss the stalled negotiations .
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