When 65-year-old Rosie Ioannou decided to retire to Cyprus in 2010 after four decades working in the UK she imagined she would live comfortably for the rest of her life in a scenic Paphos village with a nice nest egg.
Little did she know that three years later she would be left with a fraction of her hard-earned cash and struggling to make ends meet to the point where she has had to start selling her cherished heirlooms.
Ioannou (not her real name) is among the thousands of depositors of the now defunct Laiki Bank, who saw their savings vanish overnight when the island’s second largest bank, was closed down and a haircut was imposed on all its deposits over €100,000, three years ago this month.
Ioannou, who had deposited around €1m in Laiki, from her pension fund plus her inheritance from her parents, was left with €100,000 to live on for the rest of her life.
“I was a wealthy woman, I am now a pauper. I lost everything and nobody cares,” she told the Sunday Mail.
“I’ve been living on that money since then, and it’s getting less and less and less. I am neither entitled to a pension here in Cyprus, nor a medical card, nor am I eligible for the Guaranteed Minimum Income as I have more money in the bank than regulations stipulate (€5,000). I’m registered with the labour department but I can’t get a job as I’m over 60. There are so many young people without any jobs; who’s going to hire people in their 60s?” she asked.
As we know all too well, Ioannou’s case is not unique. Hundreds of people found themselves in her position following the haircut. Ioannou says it was bad enough that she was having to sell off her cherished belongings – furniture, paintings and jewellery – but she was outraged to hear last month that the civil servants union PASYDY was suing the government over the cuts in salaries and benefits for public sector workers in the lead up to the 2013 crisis and its aftermath.
Last month PASYDY boss Glafcos Hadjipetrou said that the union was claiming billions in compensation from the state as a result of the government’s decision three years ago to cut the pay of those employed in the central government and the broader public sector.
He said that the government’s decision was arbitrary as it was not the outcome of “social dialogue” and that civil servants were singled out in the drive to save the economy.
And even if the Supreme Court were to rule that the pay reductions were legal, Hadjipetrou said, a correction ought to be found, “so that everyone contributes, as happened in 1974”.
So what did these civil servants’ pay cuts mean in practice?
On September 1, 2011 a special levy was introduced for those making over €1,500 euros a month. The pay cut ranged from 1.5 per cent to 3.5 per cent for those making over €3,500.
In October 2011, the public sector began to contribute to their retirement fund for the very first time, taking another 3 per cent of their salaries, while the monthly 0.75 per cent civil servants were paying for the right to transfer their pensions to their spouses and orphans when they pass away, was raised to 2 per cent.
On June 1, 2013, following Cyprus’ bailout agreement, a further incremental decrease in wages and pensions took effect. The reduction ranged from 3.8 per cent for those making under €1,000 to 17.5 per cent for everyone making over €4,000.
Also, again for the first time ever, as of August 2013, public sector employees took a pay reduction of 1.5 per cent to contribute to their healthcare costs. Until then, every public sector worker was entitled to free state health care as part of their benefits package.
“On average, civil servants earning €2,000 saw their salaries decrease by around 20 per cent since 2011,” a PASYDY official told the Sunday Mail.
In the private sector out of those that managed to keep their jobs since 2013, cuts of 40 per cent have not been uncommon.
PASYDY, now arguing that this slashing of benefits occurred without its members’ consent, has set legal proceedings in motion for all reductions imposed on them by the government.
For Ioannou, who was contributing to her own retirement fund for more than four decades, ever since she started working, the civil servants’ demands seem preposterous.
“That’s not a contribution to the country. It’s normal to contribute to your own retirement fund,” she said.
“How can you get a pension if you don’t contribute? This is a new world! You’ve got to contribute!” Ioannou said.
If the government gives a cent back to them, she said, “they should first pay back all the people who lost their money in the haircut”. The same applies to healthcare benefits, she said.
“My father was a Cypriot. I came in good faith in this country, setting myself up to retire. I’m selling my furniture, antiques, paintings, my jewellery and all my assets I accumulated my whole life to survive.”
She added that she has also put up her house and a piece of land she owes for sale, “but nothing is selling, there are no buyers”.
“I don’t want this to be all about me, there are so many people, Cypriots, who have worked their whole lives like dogs, in their small businesses abroad, behind counters in their fish shops, greengrocers, seven days a week, 18-hours a day, and they sold everything and came back to Cyprus to retire, and all their money was stolen,” she said.
She added that if she had the money she would leave the country as would many people who lost their fortunes when Laiki was closed down.
“They’ve all got their houses on the market. They’ve had enough. The government was good enough to get their money, but nobody cares about them. People are dying penniless, with no money to go to a lawyer, they lost everything,” she said.
For Ioannou, if the government decided to offer reprieve measures to the people who lost their money due to the haircut, that would be of great help.
“If the government said they could not give that money back but gave a reprieve, but they could offer assistance, for example they could reduce property taxes or offer reductions in something else,” she said.
Laiki had received €1.8 billion in state support in June 2012. By the end of March that year, it had also received emergency liquidity assistance (ELA) from the European Central Bank. In April 2012, ELA rose to €3.8 billion; €5.7 billion in May, and €8 billion in June. When the Eurogroup decided to shut it down, Laiki had received €11.4 billion in ELA. It was fluctuating between €9 billion and €10 billion until February 2013.
Legacy Laiki special administrator Chris Pavlou, told the Sunday Mail that “hopefully, by this summer”, Laiki’s assets will be sold off, and the proceeds would go to the bank’s depositors and creditors.
He refrained from making an estimate as to the amount expected to be raised from the sale of the assets. He said however, that it would be impossible for everyone to get the amount they lost at the haircut.