* Actuaries want urgent reforms; Payout reached 4 bln in 2004-2009 *
The state Social Insurance Fund’s total payout for pensions in the five years up to 2009 reached a staggering 4 bln euros, with the population of Cyprus ageing and the pensions getting larger by the year. This makes it necessary that all social partners urgently introduce reforms, in order to make sure that 25 year olds who have just entered the labour market will receive some sort of benefit when they retire in 2048.
During the five-year period 2004-2009, nearly 140,000 pensioners received benefits worth a total 4.08 bln euros with 118,826 pensioners receiving 545 mln euros in 2004, and the numbers rising steadily year on year – 598 mln for 121,501 in 2005, 639 mln for 123,813 in 2006, 692 mln for 127,900 in 2007, 773 mln for 132,234 in 2008 and 836 mln for 137,234 pensioners in 2009.
The basic benefit, too, has been rising over the years, from 314.30 euros for a pensioner with no dependants to 523.83 euros for those with three dependants in 2009, to 346.27 and 577.11 euros, respectively in mid 2011.
In recent statements, the Director of Social Insurance, Theophanis Tryfonos, declared that the SIF is viable until 2048. However, this was quickly rejected by individual actuaries and consultants such as Hewitt Associates, who insist that urgent reforms are necessary in order to ensure the viability of the SIF.
The actuaries say that that the average taxpayer must be protected from exposure to pressures resulting from higher benefits paid out to state-employed pensioners, while they urge the government to safeguard the interest of all taxpayers by setting a ceiling on pensions to civil servants based on the public wage bill or a proportion of GDP in order to ensure that public finances are also kept under control.
A recent study by Aon Hewitt found that the average amount needed by a worker to enjoy a reasonable pension is 15.7 times his or her last annual earnings, just over half of which is expected to be the SIF.
As there is a growing number of people who have never contributed to the SIF, some 57% of beneficiaries will have to rely only on SIF payouts.
