Cyprus Mail
Cyprus

MPs to continue debate on haircut of provident funds

Prodromos Prodromou

By Angelos Anastasiou

THE House Finance committee decided on Monday to continue discussion on a bill tabled by DISY deputy Prodromos Prodromou allowing provident funds that were subjected to a haircut in March 2013 to offer shares to their members instead of cash.

The scheme would only apply to provident fund money lost in last year’s conversion of uninsured deposits into bank equity in Bank of Cyprus and now-defunct Laiki Bank.

Deputies also agreed to draft a letter to the finance minister, or even President Anastasiades, inquiring about the administration’s commitment to offer government guarantees for 75 per cent of any provident fund money an individual was entitled to before March 2013.

A representative of the Legal Services told the committee that the amended version of the bill addresses any constitutionality qualms, but added that the issue of combined remuneration – shares and cash – could be problematic and in contravention of a European Union directive.

Bank of Cyprus employees who opted to accept the lender’s voluntary exit scheme in August 2013, prior to the finalisation of the proportion of uninsured deposits to be converted, asked deputies to refrain from passing the bill as it would impact the class-action suits they filed with the Labour Disputes court asking for their full pre-haircut provident fund entitlements.

The court had set the first hearing for November 21.

But the chairman of the Administrative Committee of the Bank of Cyprus staff provident fund asked deputies to vote the bill into law before the bank’s share is introduced to the stock exchange.

After the session, committee chairman Nicolas Papadopoulos acknowledged the complexity of the issue, citing competing views among stakeholders and ongoing judicial proceedings.

“Perhaps we should examine alternatives, as well as efforts to support those most hit by the March 2013 haircut,” he said. “That is, the employees who had amassed entitlements, partly through their own contributions, only to see their deposits in the fund be haircut.”

Papadopoulos expressed concern at a finance ministry official’s response to questions of President Anastasiades’ commitment for government guarantees of 75 per cent of provident funds.

“He replied that this issue is not being examined,” he said.

Greens’ party leader Giorgos Perdikis charged that “there is an insistence by the ruling party to lend a helping hand to the leadership of [bank employees’ union] ETYK, which behaved inappropriately towards the employees who were forced to retire early in the summer of 2013.”

“It seems that some want to defend the unions’ mistakes at the expense of employees, and it really is unfair to burden them with the injustice of a second haircut,” he added.

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