Opposition DIKO on Monday unveiled its own proposal for rationalising the practice of multiple pensions paid out to state officials, which has now been linked to the Immovable Property Tax (IPT) debate, but it only served to muddle matters further.
Under a bill tabled by DIKO leader and MP Nicolas Papadopoulos, where a state official is entitled to one or more pensions due to his service in the public sector, the total amount of the pensions paid cannot be more than one-half of the highest pensionable earnings corresponding to any office or position held in the state sector.
However, it also provides that the ‘professional pension’ earned for service in the broader public sector is exempt from any offsetting exercise.
The professional pension is that which civil servants are entitled to on reaching the pensionable age of 60. Provided a civil servant has completed at least 400 months in service, he or she is entitled to a full pension, which is equal to 50 per cent of their gross monthly earnings on their last month prior to retirement.
But a number of civil servants have gone on to be hired as state officials after retirement, and are consequently entitled to both a salary as well as, later on, to a pension for time served in that state office.
DIKO say their proposal is in line with an October 2014 ruling by the Supreme Court regarding multiple pensions of high-ranking state officials. The court said pensions should be considered as private property and are thus protected under the constitution.
But ruling DISY said later it disagreed completely with the philosophy of DIKO’s bill.
“I wish to clarify that our position as DISY is that no one can receive…more than one pension, and that even that single pension should be subject to certain restrictions,” DISY deputy Onoufrios Koulla told reporters.
Asked what DIKO’s proposal entails, Koulla said civil servants who are subsequently appointed to a state office may at the same time receive their civil servant’s pension as well as their state official’s salary.
Once their stint as state official is over, these individuals would receive their full civil servant’s pension as well as the pension, albeit curtailed, they are entitled to for the time served as a state official.
Conversely, under DISY’s proposal, the retirement age for MPs and government officials would be extended by five years to 65, and multiple pensions would complement each other up to the maximum of the largest one.
The issue of multiple pensions resurfaced after DISY leader Averof Neophytou suggested rationalising the practice as a means of generating savings for the state, to cover the shortfall stemming from his own proposal to scrap Immovable Property Tax (IPT).
Speaking on Politis 107.6 FM, the Politis radio station, Neophytou on Monday revealed that since tabling his proposal last week he has received dozens of complaints from individuals who are currently beneficiaries of multiple pensions.
These included MPs, ministers and other state officials.
“I want to be very candid about this. Whereas for years many ordinary people used to call me to protest about this practice [multiple pensions], and rightly so…after we tabled our proposal it was only the interested parties who called me, a few dozen, those individuals who would be affected.
“That’s just the way we are,” he added.
The fresh deliberations on multiple pensions have a bearing on discussions for restructuring of IPT. If the parties cannot agree on how to generate savings from pensions, they are also unlikely to reach consensus for restructuring IPT.