Government sets 2026 target for pension increases

Cyprus is preparing its next major reform, with the government setting a target of significant pension increases by 2026, starting with low-income pensioners.

President Nikos Christodoulides said pension reform is now a top priority, following the recent approval by parliament of major changes in education and taxation.

He said the lowest pension, currently about 510 euros, is unacceptable and must rise. He stated that internal government planning shows the goal is achievable within the current economic framework.

The comments were made in the second part of an interview with the Philenews newspaper, published after the House of Representatives approved the reform of teacher evaluations and a broad tax overhaul.

Both measures passed with strong parliamentary majorities, ending decades of delay.

The president described the parliamentary votes as a turning point. He said doubts had been raised about whether the government could pass major legislation.

He added that wide support in parliament strengthens political stability and allows reforms to continue without interruption.

He confirmed that the government will not withdraw reforms despite reactions, including opposition from trade unions over teacher evaluations.

He said changes are targeted and aimed at supporting families, the middle class and young people.

President Christodoulides outlined five core government priorities.

These are a strong and resilient economy, national security including foreign policy, defence and migration, structural reforms, transparency and accountability with action against corruption, and improvements to daily life.

He said health, education and housing are central to this effort.

He linked pension reform directly to economic performance. He said strong growth and responsible public finances allow the state to strengthen social policy.

Social spending rose by 6 per cent in 2024-2025 and is expected to rise by a further 6 per cent in 2026.

Investment plans were also set out. The government aims for all primary schools to operate as optional all-day schools by 2028.

More than 126 million euros have been allocated for new health infrastructure.

The President said economic growth must benefit society as a whole. He described the government’s approach as social liberalism, combining support for a free economy with targeted state intervention.

He pointed to increased funding for people with disabilities and the activation of the national solidarity fund to return money to depositors affected by the 2013 bank bail-in.

He said these policies are possible because the government is not driven by electoral pressure. He said that it does not take part in local or parliamentary elections, allowing it to take decisions without political cost.

On migration, the president said the situation has changed significantly. Arrivals have fallen by more than 80 per cent, while returns have increased by over 60 per cent.

He said this is the result of a comprehensive policy that has made Cyprus a less attractive destination for irregular migration.

He added that Cyprus’ approach is now being discussed at European level. He said the German chancellor has expressed interest in sending officials to study the practices used.

Despite progress, the president said serious challenges remain. He identified electricity prices as a major issue affecting households, businesses and competitiveness.

Housing was described as another key challenge, now recognised at EU level following a Cypriot initiative.

A European funding tool is expected by 2026. He also pointed to the high cost of living, explaining that while inflation in Cyprus is among the lowest in Europe, prices remain high.

He said boosting wages and reducing basic costs are essential to strengthen purchasing power.

The president also referred to reforms in state institutions, including the Law Office and the Audit Office, and action against organised crime.

He said there is now closer coordination between authorities, leading to concrete results.

He cited investigations into cases where individuals receive minimum guaranteed income while displaying unexplained wealth. He said such cases are now reaching the courts.

President Christodoulides said modernising the state, first established in 1960, is necessary and is being done for the benefit of society as a whole.