MPs to tackle 12% early retirement penalty

Cyprus MPs will be looking into Opposition demands to scrap the 12% penalty clause imposed on people who retire two years early aged 63, once the summer recess ends on 30 August.

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%.

The House will also have to address discrepancies in the law governing pensions, as people who work past the age of 63 are not entitled to sickness benefits if they become ill or injured.

Therefore, they are essentially forced, should they get sick, to retire early without wanting to, having to take the early retirement penalty.

The issue was spotted, with the government taking action in 2020 to correct the matter.

However, the House amended a bill prepared by the government, with President Nicos Anastasiades not approving the additional changes made.

The bill was referred to the Supreme Court, which found the changes to violate the constitution.

The court’s ruling was issued just last month, with the government re-tabling the original bill.

MPs have called on all social partners and ministries to give feedback on the proposed legislation.

In recent years, opposition parties and trade unions have contested the 12% penalty on early retirement, with demonstrations taking place.

The opposition claims that faced with the conditions created by the pandemic, the rise in unemployment and the inability of many workers to re-enter the workforce after a prolonged period of inactivity, full pensions at 63 should be restored.

On the other hand, the government argues 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%.