Unions and employers clash over provident funds

A gulf separates employers’ organisations and trade unions on the issue of provident funds and how they should fit into pension reform as a whole, Labour Minister Marinos Mousiouttas said on Thursday. He was speaking to media after the latest meeting of the labour advisory aboard, which discussed provident funds for the first time. The minister confirmed that trade unions want provident funds to be prescribed by law so that all private companies offer one, whereas employers insist they should remain voluntary. In Cyprus, provident funds are based on collective or private agreements between employers and workers. No legislation exists mandating that companies provide a provident fund. Having heard the two sides’ views on the matter, Mousiouttas said, the government would try to find the ‘sweet spot’. The next meeting of the labour advisory board is scheduled for Friday, November 9.

The government’s general position, said the minister, is that provident funds “are a necessary institution, which supplements workers’ pensions. “What we’ll try to do is see how this institution can be expanded. ” Stakeholders also discussed some of the details, such as how provident funds would be cashed out on retirement – whether as a lump sum or in instalments. Another issue is whether it would be possible to borrow from a provident fund, under certain conditions, as is the case today. However, the minister clarified that sorting out the provident funds question “is not something that will happen today or tomorrow or even next year”. In order for a provident fund to ‘mature’ and to yield, it takes at least a decade, he added. Nevertheless, the talks would continue, and once the government brokers an agreement between trade unions and employers, the relevant bill would begin being drafted.…