The Minister of Labour, Yiannis Panayiotou, has unveiled a proposal aimed at providing financial relief for retirees. This proposal centres on reducing the 12% penalty imposed on pension payments for individuals who retire at the age of 63.
Approximately 9,000 existing retirees who exited the workforce at the age of 63 are expected to benefit from this proposal in its initial phase, according to philenews. They stand to experience a substantial reduction in the 12% pension reduction penalty.
Moreover, the proposal includes specific criteria that will be used to determine eligibility for pension penalty reduction. These criteria will consider individuals who have contributed to the pension fund for a minimum of 40 years. Those who meet these criteria will have the opportunity to be exempted from the pension reduction penalty entirely.
More details and the comprehensive proposal will be subject to negotiation with social partners, with the aim of implementing the necessary adjustments as soon as possible, philenews writes.
According to Michalis Antoniou, the Director-General of the Cyprus Employers and Industrialists Federation (Oev), the full elimination of the penalty from the basic pension provided by the fund, representing approximately half of a retiree’s total pension, could potentially translate into a reduction of the penalty for those meeting the criteria to approximately 6%, down from the current 12%.
In essence, retirees who meet the yet-to-be-finalised criteria will experience a significant reduction in the penalty imposed on their pensions, potentially halving the existing 12% penalty. This change is expected to bring about an increase in the total amount of their pension payments.