Social security fund vote postponed

A DEADLOCKED parliament yesterday postponed voting on a contentious bill aimed at keeping the Social Security Fund afloat through raising employees’ contributions.

The government bill provides for a 0.5 per cent increase in contributions to the SSF by employees and employers, and 0.3 per cent from the government. It also provides for five-yearly increases, and plans to cover the next 40 years.

A study by the Labour Ministry has shown the SSF would go bust by 2043, leaving hundreds of thousands without pensions.

But with opposition from DISY, DIKO and EVROKO and an impasse in the House inevitable, politicians decided to put off discussion for a week until a compromise formula is reached.

The proposed legislation envisages five-yearly increases to contributions over the next 40 years. Under another clause, effective from 2010, it would abolish unemployment benefits for early retirees, and for people who leave the employment market due to a private pension scheme or collective agreement and who receive pension benefits without having made any contributions.

Opponents of the scheme say that if it were adopted as is, by the year 2049 Cypriots would be contributing to the fund as much as 40 per cent of their wages to the fund and to the NHS combined.

DISY and DIKO have indicated that they would endorse it for a five-year period only. The compromise will likely be worked into the bill when it next comes up at the plenum.

While debate went on inside the parliament building, outside students, teachers and youth organizations demonstrated against the bill. Meanwhile through its spokesman Stephanos Stephanou, the government voiced its annoyance at the parties’ stance, since the bill had been discussed with social partners before it was submitted to the House.

The government wants to avoid raising retirement age at all costs. There’s a suspicion that parties are playing a political brinkmanship game: forcing matters to the point where the administration will have to choose between either increasing the retirement age or actual contributions.

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