Old age and health dominate Cyprus’ social benefits spending

Cyprus’ social spending drops to 19.2 per cent of GDP in 2023

Social protection expenditure fell as a percentage of Gross Domestic Product (GDP) in 2023, even as the total spending increased in millions of euros, reflecting economic growth, according to the Cyprus Statistical Service (Cystat).

Social protection expenditure reached 19.2 per cent of GDP in 2023, a decrease from 20.6 per cent recorded in 2022.

The total expenditure on social protection in 2023 amounted to €6.23 billion, compared to €6.12 billion in 2022.

The data reveals that the most significant functions driving this expenditure were old age, a well as sickness and healthcare.

Combined, these two functions constituted 76.3 per cent of the social protection benefits provided in 2023, slightly up from 76.1 per cent in 2022.

Old age benefits, which include both cash benefits such as periodic pensions and benefits in kind, recorded an increase, reaching €2.53 bn in 2023, up from €2.39 bn in 2022.

The largest portion of old age benefits concerns periodic pensions, which amounted to €2.11 bn and constituted 83.5 per cent of the total old age benefits.

Significantly, €1.99 bn of the periodic pensions granted to beneficiaries in 2023 were non-means tested, meaning they were provided without verification of the recipients’ financial situation.

Expenditure on the sickness/healthcare function also rose to €2.13 bn in 2023, compared to €2.10 bn in 2022.

Increases in social benefits were also recorded in several other functions.

Survivors’ benefits increased to €378.30 million in 2023, up from €360.20 million in 2022.

The family function saw a rise to €283.20m in 2023, compared to €257.70m in the previous year.

Disability benefits amounted to €193.20m in 2023, an increase from €184.70m in 2022.

The social exclusion function also recorded a rise, with social benefits reaching €234.90m in 2023, up from €229.10m in 2022.

Conversely, a decrease in social benefits was observed in two functions.

The unemployment function saw a drop to €246.30m in 2023, down from €265.90m in 2022.

Similarly, the housing function recorded a decrease, with social benefits amounting to €108.40m in 2023, compared to €112.60m in 2022.

In terms of how the benefits were provided, most social protection benefits delivered to beneficiaries in 2023, a significant 89.6 per cent, were non-means tested benefits, totalling €5.46 bn.

These benefits are generally granted to beneficiaries who have made contributions to various insurance funds, such as the Social Insurance Fund, and are not conditional on the beneficiary’s income or wealth falling below a specified level.

The majority of benefits in 2023 were provided as cash benefits, amounting to €3.83 bn, while benefits in kind constituted 37.2 per cent of the total social protection benefits, reaching €2.27 bn.

Of the cash benefits, 80.7 per cent, which is €3.09 bn, were provided periodically, such as pensions and other regular payments, with lump sum benefits making up the remaining 19.3 per cent.

The analysis by scheme showed that the Social Insurance Scheme is the largest provider of social benefits in Cyprus, disbursing €1.95 bn in 2023, representing a 31.3 per cent share of the total expenditure.

The General Healthcare System (Gesy) is also a significant contributor, accounting for €1.46 bn, which is 23.4 per cent of the total expenditure.

Other schemes include other governmental social protection at €806.00m, which represents a 12.9 per cent share, and semi-autonomous social insurance institutions at €605.10m, which holds a 9.7 per cent share.

The remaining schemes comprise central government health services at €529.40m with an 8.5 per cent share, and civil service social protection at €514.70m, accounting for an 8.3 per cent share.

Smaller rates were recorded for the remaining schemes, the statistical service concluded.