Index Rises, But Financial Pressure Persists

Cyprus recorded an improvement in financial wellbeing in 2025, but the latest research suggests many households continue to struggle with rising living costs, financial stress and uncertainty over retirement.

The Financial Wellbeing Index for Cyprus climbed to 54.6 points, up by about four points from 2024, according to research published by the Financial Wellbeing Institute and cited by the Finance Ministry on Thursday. The ministry said all 14 components of the index improved, pointing to a broad strengthening in households’ financial position.

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Government Credits Tax Relief And Pension Reform

Responding to the findings, the Finance Ministry said the results reflect measures introduced to support disposable income, while acknowledging that inflation, energy costs and pension adequacy remain key concerns for many households.

Recent initiatives include revised income tax brackets, a higher tax-free threshold and additional tax reliefs for different categories of taxpayers. The government is also pursuing pension reforms aimed at improving the system’s long-term sustainability, strengthening retirement income and rebuilding confidence in pension provision. Alongside those measures, the ministry identified financial literacy as another priority, arguing that better budgeting, saving and financial planning can help households build greater resilience.

Many Households Continue To Struggle

Despite the overall improvement, the research shows that financial wellbeing remains uneven across the population. According to the survey, 38.4% of Cypriots fall into the two lowest categories, with 15.4% classified as financially vulnerable and 23.0% as financially struggling.

By comparison, 27.7% of respondents were considered financially adequate, while 20.8% were financially secure. Only 13.1% were classified as financially thriving, suggesting that relatively few households feel they have achieved lasting financial stability.

That picture is reflected in the index’s individual components. Financial stress remained the weakest area, scoring 48.8 points and staying below the 50-point threshold.

Almost half of respondents, or 49.5%, said financial issues cause them stress and anxiety, while 45.1% reported difficulty making ends meet. Rising living costs were identified by 26.1% of participants as the biggest threat to their financial stability.

Retirement Concerns Remain High

The survey also highlighted continued uncertainty about retirement. Nearly half of respondents said they do not expect to maintain their current standard of living after leaving the workforce.

Participants estimated that the state pension would replace 52.3% of their final salary, while Social Insurance Fund data put the actual replacement rate closer to 42%. The gap suggests many households may overestimate the level of income they are likely to receive once they retire.

Taken together, the findings indicate that Cyprus has made measurable progress in improving financial wellbeing, but many households have yet to feel that improvement in their day-to-day finances.