Filenews 17 June 2023
Employees who do not receive ATA not only did not see increases in their salaries, but in the new year they will see small reductions.
The reason is the imminent increase in contributions to the Social Insurance Fund, as of New Year's Day 2024, based on the measures taken in the past and specifically in 2009 to shield the sustainability of the Social Insurance Fund in the long term.
Measures that provide, inter alia, for the five-yearly increase in social security contributions of all parties, which started in April 2009.
OEB reminded its members in a circular on Tuesday of the fourth, since 2009, increase in contributions to the Social Security Fund as of January 1, 2024, bringing the issue back into the news.
According to OEB, in 2024 there will be an increase in employers' and employees' contributions to the Social Insurance Fund (SSF). Specifically, according to the Social Insurance Law, OEB reports, as of 1/1/2024, the mutual contributions of employer and employee to the Social Security Fund are increased by 0.6%, i.e. from 8.3% currently in force to 8.9%, on the insurable earnings of the employee.
At the same time, of course, i.e. January 1, 2024, the state's contribution to the Social Security Fund will also increase, as the contribution from the fixed fund of the Republic to the Fund will increase to 5.3% from 4.9% today.
An increase in contributions to the Social Security Fund will also occur for the self-employed in the new year, based on the current legislation and the measures taken in March 2009.
Then, in 2009, for employees and businesses, it was decided to increase their contributions to the CTA by 0.5% every five years. However, the new increase in 2024 for employees and businesses will be of the order of 0.6% following an amendment to the legislation in 2019 when the provision for widows' pension was introduced for men as well.
With the same amendment, however, a provision was introduced into legislation in order to precede the planned increase in contributions. In fact, the legislation states that in case the actuarial study that will be carried out before the imposition of the projected percentage increases on insurable earnings shows that, with or without taking any measures, it is not necessary to impose increases, or it is necessary to impose smaller increases, the percentages of insurable earnings indicated by the aforementioned actuarial study will be imposed.
However, the legislation clarifies that the percentage increases may not be lower than the amount of the percentages on insurable earnings in force immediately before the entry into force of the Social Insurance (Amendment) Law of 2019.
According to "F" information, the actuarial study, as recently informed by the Minister of Labour in the framework of the Labour Advisory Body, will be ready in September, when developments around the issue and a dialogue on pensions in general should be expected.
Proposal for a freeze
However, in the context of the same meeting of the Labour Advisory Body, information tells us that OEB, due to the increasing inflation that increased through ATA and not only the wage costs of businesses, requested the suspension of the additional increase in contributions to the TCA, which will continue until 1, scheduled for January 2024, 2039. provided that the actuarial study shows that such a development would not result in a problem with the viability of the CTA or increased pressure on the Fund.
On this issue, OEB also sent a relevant letter to the Ministry of Labour, while as mentioned, the Federation also informed all the social partners that participated in the Labour Advisory Body, but without taking any decision that should be expected after the presentation of the actuarial study that will be ready around September.
Such a possibility, however, i.e. suspension of the planned increase in contributions to the Social Security Fund, is considered rather remote and therefore OEB, as we mentioned, has already informed its members in a circular about the upcoming increases in an effort to facilitate them to draw up their financial planning for the new year.
Low contributions, says SOAK
The suspension of the planned increases in contributions to the TCA, even if the actuarial study shows that it could be done, does not, however, favour the Cyprus Economy and Competitiveness Council (SOAC).
At least as can be seen from the recent proposal he submitted for strengthening pension income in Cyprus, in which he emphasizes the need to develop the second and third pillars of pensions, namely provident funds and private pension plans.
However, it also makes references to the first pillar, with the SOAK concluding that the first pillar alone cannot address in its entirety the serious issue of ensuring an adequate pension income for citizens, for a number of reasons that it records.
These include the fact that young people today enter the labour market at relatively older ages than before, and as a result their contributions to the CTA are smaller and as a consequence of this situation they receive lower pensions.
It also records the fact that the pensions received by low-paid people are reduced, since, as he notes, their contributions to the Social Security Fund are low. Based on the latter and since everyone's goal is to strengthen pensions, any suspension of the increase in contributions does not seem to be an easy option but it is certain that the issue will be discussed after the actuarial study that will be prepared and is estimated to be the basis and background for any examination of OEB's request and generally the amount of the upcoming increases in contributions. as provided for by the current legislation.
