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Cypriot system unsustainable - Sarris

CYPRUS - Civil servants will have to contribute to their pension fund in order to prevent a collapse of the system, according to the island's finance minister.

Raising the retirement age for civil servants from 60 to eventually 65 and making them contribute towards their retirement might be the only way to help the island's ailing system, according to finance minister, Michalis Sarris, and the Cyprus Chamber of Commerce and Industry (KEVE).

But unions oppose changes to the retirement provisions for public and private sector employees. This is a hot topic like that might not be touched before presidential elections next spring.

Cyprus was one of the members states identified by the EU whose public finances were at "high risk" due to population ageing.

The most notable problem currently is the state of the Social Insurance Fund, which according to various media reports is "nearly bankrupt".

Michalis Antoniou, director at the Employers and Industrialists Federation (OEV) pointed out that average life expectancy on the island has increased by almost ten years over just as many years and now stands at 80.

"While plans were made for the fund to pay out pensions on average for six or seven years, it has ended up paying for more than double those years," he said.

Government representatives confirmed to the Cypriot newspaper, Financial Mirror that there will be talks about the Social Insurance Fund but did not want to give any details.

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