Government Moves to Abolish Multiple Pensions for Officials
In a significant shift in policy, the Cypriot government has announced its intention to abolish multiple pensions for government officials. Finance Minister Makis Keravnos emphasized the government’s commitment to reform, ensuring that any changes will be firmly rooted within legal boundaries.
Contrary to earlier reports suggesting a “gratuity payment,” the finance ministry clarified that officials would receive a one-time payment instead of multiple pensions. This lump sum aims to replace the lifetime monthly pensions currently granted to individuals who have served in high-ranking positions once they reach retirement age.
The proposed reform will align the age of pension receipt with the national state pension age, increasing it from 60 to 65. At this age, eligible officials would receive a single lump sum based on their service, though the exact formula for calculating these payments is still under development.
The current system allows for some individuals to receive up to six different pensions, depending on their roles in government. This has sparked debate over fairness, as it contrasts sharply with the state pension system for ordinary citizens. The finance ministry source highlighted the need for a fairer system that does not provoke the working population, who may perceive the current arrangement as inequitable.
While the new approach is expected to save money in the long term, there are still questions regarding the cost of the lump sum payments. The ministry insists that while the cost of multiple pensions is not exceedingly high, the perception of fairness is a driving force behind the change.
Legal challenges are also at play, as altering the constitution to remove pension entitlements is not feasible without the consent of the Turkish Cypriot community, which has been disconnected from the Cypriot government since 1963. Therefore, the government’s strategy involves crafting a solution that respects constitutional constraints.
Minister Keravnos has stated that ongoing discussions with legal services are productive and that more dialogue is expected. He reassured that while abolishing multiple pensions is the immediate goal, there will be time to address any additional concerns, such as potential tax implications of the lump sum payments.
The proposed changes will not be retroactive, meaning current recipients of multiple pensions will retain their benefits. The focus now is on creating a fair and sustainable pension system for future officials, with further discussions and stakeholder engagement anticipated.
