Insider Economy Most Cypriots won't be able to enjoy decent retirement pensions

Most Cypriots won’t be able to enjoy decent retirement pensions

The majority of Cypriots won’t be able to get a decent enough pension after the mandatory retirement age of 65, according to a study carried out by Aon plc retirement and investment consultants.

This also shows that an average Cypriot employee with 10 years of contribution to Provident Funds and whose annual earnings are around  €35,000 and savings €33,000 euros will not be able to retire at 65 and continue to enjoy the same standard of living as when he/she was working.

Aon’s Pantelis Argyrou who was addressing the recent 10th Pension Forum explained that based on the above parameters and contributions to the Social Security Fund which is currently 6.5% for the employee and 6.2% for the employer, that employee will have saved only a total of one annual salary.

Therefore, it will be difficult for that employee to retire and continue his/her life at the same level considering the prevailing Social Security contribution data.

Argyrou also said that he average employee today would have to save seven times his or her annual salary up to the age 65 to be able to meet sufficiently retirement needs.

What is shocking, he added, is that only 2% of current employees are expected to achieve this goal. An employee who starts saving consistently from his 25th year and over the next 40 years (without calculating income breaks) will need a total contribution of 15% for a sufficient retirement income.

And if this scenario is delayed, then the rate of savings would increase dramatically – between 19% -22%. This menas that an average employee today would have to retire at 72 to enjoy a decent enough pension.

“The pension needs of employees at higher income scales will be higher than the average worker. Workers who receive over €6,000 in annual salaries should have saved over nine annual salaries or more.

“The main reason is that employees on higher income scales will receive less reimbursement from Social Security so they will have to cover most of their private needs,” Argyrou also said.

At the same time, Statistical Service latest data shows the average monthly salary in Cyprus standing at €1,939 by end of 2018. But for conclusions based on scenarios referred by Argyrou the annual salary of an employee should reach €35,000 annually or about €3,000 monthly.

By George Pyrishis

Top Stories

T/C members of the Technical Committee on Culture resign

All Turkish Cypriot members of the Technical Committee on Culture submitted their resignation saying that the outcome of the “presidential elections” does not comply...

More than 900 signatures against Asphalt factory in Tseri

Online signing of petition for the suspension of work of a non-authorized industrial unit of asphalt located at the municipal boundaries of Tseri. The...

Private hospital postpones regular operations

Private Hospital Evangelismos in Paphos announced that due to increased demand, the number of cases provided by the framework of cooperation with the Health...

Expert expects reduction of COVID-19 cases due to measures

Even if there is a drop in the number of COVID-19 cases, this will not mean that the danger has been overcome and that...

Limassol Bishop: Holy Synod must be convened

The Bishop of Limassol Athanasios told the CNA that he is displeased with the decision of Archbishop Chrysostomos B’ to recognize the autocephaly of...

Taste

Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...

Mezedes

No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...