Cyprus has 1850 pension funds

…CYTA, EAC and Hotel Employees the largest

 

Cyprus is waiting for passage of new European Pension Directive 41/2003, hopefully in few weeks promising to bring a lot of changes and new challenges for pension funds in Cyprus. 

With the state-owned Social Security Fund seen running into deficit unless dramatic changes to its composition and level of contributions are made, coupled with suggestions to increase the retirement age from 60 to 63 while actuaries are calling for the limit to be increased to 65 years of age, there is a lot of anxiety among the population regarding their pensions.

There are also the privately run pension funds, most of them happy until now to place the funds on deposit with banks and earn a decent interest. That however has changed following the reduction in interest rates, and in the case of Cyprus pound deposits, the imposition of the defence levy on interest income earned, further reducing the return of such assets.

That’s why Board Committees of the pension funds need to look at different options, hire professionals as investment consultants and adopt new strategies to achieve higher returns. 

There are in total around 1.850 pensions in Cyprus both DC (Define Contribution) and DB (Define Benefit), but only 120 with more than 100 members.  All of the pensions have their own Board Committees running the funds and responsible for the investments with some having permanent staff for the daily operations.  The members of the Board Committees for the DC are from the management board and for the CD are from the employers, the trade unions and the employees.   

There are some government pension funds based on DB and the rest are industries pension funds and private companies pension funds both based on DC.  In terms of value, the biggest in size is the Cyprus Telecommunication Pension fund (DB) with EUR 550 mln, followed in second place by the Cyprus Electricity Pension Fund (DB) with EUR430 mln and in third place is the Hotel Employees Provident Fund (DC) with EUR 240 mln.