Georgiades: Pensions Reform a Top Priority for Government

15:45 - 24 Νοεμβρίου 2016

Over 70% of employees reach the age of retirement without having enough for a decent pension, Cypriot Finance Minister Harris Georgiades said on Wednesday, November 23, adding that the total reform of pension benefits is a top priority for the government and possibly “one of the most important reforms of a structural nature of government planning for the remainder of this administration.”

Georgiades, who was replying to questions during the 7th Pension Forum, in Nicosia, expressed the government`s intention to increase the percentage of tax relief for employees who contribute to provident and pension funds, Cyprus News Agency reports.

“We want to establish less but better funds, professionally managed, with the right professional policy, with transparency and oversight rules, enhancing the efficacy of the funds and their members and we want to create the conditions for the correct growth of this necessary pillar,” he said.

“It is a multifaceted reform, which aims to establish a modern, effective framework guaranteeing a decent pension for all the population,” Georgiades pointed out.

He further expressed the view that so far neither the state nor society have ever really reflected on the phenomenon of people who have worked their entire lives and at the end they are left exposed either because they did not take part during their working life in a professional pension plan (provident fund) or because they partly participated in one.

The Finance Minister expressed the government`s intention to offer such a professional pension plan to all newly hired public servants.

Noting that a very small percentage of payments/ benefits from the funds is related to pensions, he said that all these issues, including tax incentives and disincentives, need to be looked into in certain cases.

“We are not negative, we wish to look into the possibility of granting reinforced tax incentives which today are limited to one sixth of the income,” he said. He clarified that any tax incentives will be granted to funds related to pensions and no other purpose.

Georgiades further said that the rules of early disbursement of a provident fund, the rules of dissolution of a fund and the rules of a member borrowing from a fund need to be examined, adding that soon consultations will take place between the government and the sector`s professionals in order to look into all choices ahead.

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