CYPRUS - The Turkish Republic of Northern Cyprus is preparing for a pension reform over the coming months.
Türkay Tokel, minister for labour and social security in Northern Cyprus, told IPE the ministry of labour and social security would present six alternative models on increasing retirement age to the government this week.
All six models will gradually increase retirement age from the current 50 years to 60 over the coming years.
The ministry has worked on the project for the past six months.
Tokel said: "If the government accepts our projections, we will draft a law on the reform as soon as possible, after which the draft will be debated at the parliament and enacted into law.
"We can bring a change in the system during 2010, but this will, of course, depend also on the political landscape.
"North Cyprus has one of the lowest retirement ages among south European countries, and this is no longer sustainable.
"The finer details of the reform are yet to be decided on, but what I can say in a short is that, after the reform, retirement at 50 will just not be possible."
The ultimate goal of the reform is to manage the social security funding gap in North Cyprus, which, according to Tokel, is growing by TRY10m (€5.2m) each month because of the lack of balance between pension payments and social security contributions, increasing number of pensioners and growing unemployment.
The population of the Turkish Republic of Northern Cyprus currently stands at some 300,000, with approximately 100,000 in active employment and 27,505 retired.
The number of pensioners grows by some 100 people each month.
Pension payments currently cost North Cyprus state budget TRY40m a month, but income from premiums collected totals only TRY30m.
Unemployment, which stands at some 12%, according to the State Planning Agency, is most severe among youths between 15-24 years (31.4%).
"We are proposing a step-by-step transition to a new system, which is likely to raise less opposition than a sudden sharp increase in retirement age," Tokel said.