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12% pension penalty on early retirement to be scrapped after one turns 81

Trade unions in Cyprus have not welcomed the government’s fresh proposal for the 12% pension penalty on early retirement to be scrapped after one turns 81.

The government set the age of normal retirement in 2012 at 65, with legal provisions included so that for each month someone opts to collect their pension earlier, the pension is reduced by 0.5%.

Trade unions insist that full pensions at 63 should be restored.

However, the government again argued that since the age of normal retirement has been raised to 65, legal provisions have been included so that for each month someone opts to collect their pension earlier, the pension is reduced by 0.5%. At least until the age of 81 so that the state’s budget is not overburdened.

And from that age on full pension to be granted to all, Labour Minister Kyriakos Koushos also told House Labour Committee MPs on Tuesday. That is one way to correct this particular distortion, he added.

“If someone retires at 63 and receives a 1,000 euro pension, it means that he will receive a 26,000 euro pension until he is 65. If he retired at the age of 65, this amount would increase by 12%, that is he would receive a pension of 1120 euros,” he said.

“That is, they will receive a reduced pension of 12% for 18 years (as a punishment for early retirement by two years) and as soon as they turn 81, they will be paid a full pension,” he added.

Koushos also said that those who got a pension at 63 with the penalty will become unfairly treated after the age of 81 and that’s what the government is trying to make right.

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