Bill on the occupational pension benefit plan in the public and wider public sector was approved by the Council of Ministers today. It covers all serving employees who were recruited or appointed after 1/10/2011 and those permanent employees who will be appointed to a position for the first time on or after the effective date of the Act.
In particular, a new special fund for the payment of pension benefits will be created which will be funded by both the employer and the employee in an amount equal to 5% of the member's monthly pensionable earnings.
The funding percentage may be adjusted in the future following appropriate actuarial studies.
The funding percentage may be adjusted in the future.
In a statement after the Cabinet meeting, Finance Minister Constantinos Petrides said the plan covers all employees who are employed for an indefinite period in the state service and in the wider public sector, local government, special police officers who have been made permanent as special police officers under the law, contracted non-commissioned officers and forestry college graduates.
He noted that the design of the new occupational pension benefits plan is rooted in the philosophy of the operation of provident funds.
It is a plan that is not like the previous plan that was in place before 2011, in which benefits were dependent on final salary, but is a plan that is dependent on contributions, he added.
He said that in this way both the sustainability of public finances and the rights of the employee are ensured.
"So this pending issue that existed after 2011 when the previous pension plan for new entrants was terminated is finally lifted," the Finance Minister said.
He said today's decision by the Cabinet closes a pending issue that has existed since 2011 in the public and wider public service, adding that this plan is much more advantageous to the taxpayer than the previous plan, which was in place before 2011, but it also ensures the sustainability of the fund, which is for the benefit of the employee himself.
Asked how many people are affected, the Finance Minister said it is several tens of thousands.
In response to another question, he said the plan will be implemented upon passage of the legislation but will take effect on October 1, 2011.
"And contributions will be made on behalf of the state itself. And we have cases where we have people who have retired and they will be covered. So we believe that it is a very good plan, which is the result of close consultation and agreement with all the workers' organisations, the PASYDY, the PEC, the PEO, the police officers, the educational organisations, the OLTEK, the POPED and the OELMEK and all those involved in these plans."
Source: CNA
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