The 10-year gap is to be filled by the new professional pension benefit plan for employees in the public, wider public sector and local government, the discussion of which started on Monday in the Finance Committee of the House of Representatives.
Finance Minister Constantinos Petrides, presenting the bill,[/B] noted that he believes that it safeguards the rights of employees, while the way the plan operates ensures the sustainability of public finances.[/B] He said the proposed bill is the result of an agreement with trade unions, following several years of dialogue.
The Minister said that the assets of the fund may be invested by the Minister of Finance. There are, however, safeguards. In particular, it is prohibited to use the fund for borrowing from the state or the members of the fund. It may, however, be used to invest in government bonds with a specific maturity date. In addition, he said, through the preparation of financial statements on an annual basis by the Accountant General and audit by the Auditor General, full transparency and sustainability of the fund is ensured.
Petrides also said that a monitoring committee, composed of a representative of the Ministry of Finance, and the trade unions PASYDY, SEK and PEO, is to be established to confirm that the fund's resources are used for the purposes of the fund's establishment and regulations.
According to the Minister, members of the new scheme are all newly appointed permanent employees appointed on or after 1 October 2011, as well as those permanent employees who will be appointed for the first time to a position on or after the effective date of the Act, in the State Service and the wider public sector. As noted, the plan also includes permanent employees in the State and wider public sector, special police officers who have been made permanent, contracted non-commissioned officers and Forestry College graduates employed on fixed-term employment contracts.
According to the Civil Service, the number of employees employed in the narrow public sector who will be covered by the plan is 12,571. In addition to these will be those employed in local government and the wider public sector, for whom the Minister did not have figures.
The employer and member will each pay 5% of the member's monthly pensionable earnings, following an actuarial study by a major actuarial firm. The percentage may be adjusted in the future, following an actuarial study.
The Minister noted employees' retroactive contributions would be payable either in a lump sum within 14 months, or in 24 monthly instalments deducted from the member's salary.
In addition, the lump sum will not be taxed, which, under the second bill filed together, in relation to the pension benefits of government employees in the public, wider public sector and local government, will also apply to members of the existing Government Pension Plan, as the taxation of the lump sum will be abolished from 1/1/2021.
With regard to individuals who would have been covered by the scheme but have since retired or passed away, the Minister said that although there is no provision in the Bill, there is a political commitment that a lump sum will be calculated for them on a pro-rata basis as part of good administration.
In his remarks after the debate, the Minister said that this is a historic day for both workers and public finances. "It is worth noting that 90% of the workers' organisations have also expressed their satisfaction, their satisfaction with this bill," he said.
In response to a reporter's question about the compulsory implementation of the bill in sectors where individual provident funds are implemented, such as AHK, the minister said existing employees can keep their provident funds, but for reasons of equity, good administration and efficiency, new employees will have to enter the new scheme.
The deputy chairman of the Finance Committee, DIKO MP Chrysis Pantelides, said in a statement after the debate that he was keeping two points from the debate that started on Monday. The first is the satisfaction expressed by the guilds and the second is the disagreements expressed by trade unions on certain aspects.
"Disagreements concerning officers have been heard, disagreements about persons who have retired from 2011 to date and the disagreement of the Electricity Authority guilds," he said. He noted that the committee will work intensively to complete its consideration of the two bills as soon as possible, but stressed that it is an agreement that was reached 13 months ago "and it is not easy to expect the House of Representatives to complete its own work in just 10-13 days," he said.
DISY MP Onoufrios Koulla said that the new bill, in addition to the 10-year gap it covers, comes to cover new categories of thousands of workers, who until now have never had any pension rights, such as permanent workers and special officers.
AKEL MP, Andreas Kavkalias, said that these bills come to cover a 10-year gap, which concerns the removal of the right of new entrants to the public and wider public sector to the second pension pillar.
DPA-Cooperation MP, Alekos Tryfonidis, said that, "despite the effort we welcome, there are certain categories of workers who have either been excluded or grossly unfairly disadvantaged. We note the huge injustice done to contract noncommissioned officers, about 1,150 people," he said, adding those who have been out of service from 2011 to 2020, who received no pension benefits and are forced to work at age 65 and other categories.
PASYDY, SEK, PEO, OELMEK, OLTEK and PDOED who participated in the consultation, welcomed the opening of debate on the bill and asked if it was possible for it to be voted on by the House of Representatives before the House's summer recess.
The OELMEK called for the period for repayment of retroactive contributions to be increased from 24 to 60 instalments to make it easier for workers.
The Electricity Authority Guilds wondered why the Ministry is reintroducing the logic of pension funds when it had previously promoted provident funds. They noted that the implementation of the new plan is strangling their provident fund, which was drafted under the guidance of the Ministry of Finance. They also noted that the employer would be required to make increased contributions compared to an existing provident fund, while employees would be harmed. They also questioned why the new plan would not be under the supervision of the occupational fund curator and noted that they were asking for an exemption from the legislation or the possibility of voluntary participation in it.
The Cyprus Police Association and the Cyprus Army Petty Officers Association noted their own concerns in relation to the specifics of their retirement age and how their members are affected, as police officers are compulsorily retired at 62, while SYPs retire at 57, with the possibility of an additional extension with two three-year contracts.
The Pension Benefit Claims Committee for those who have retired since 2011 reported that they have not received either a supplementary pension or a lump sum, leaving them "looking for a living" after retirement.
Source: KYPE
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