THE Administrative Court on Tuesday ruled in favour of six former state officials who were reclaiming part of their retirement fund, withheld pursuant to a law passed in early 2013.
The court found that the contentious provision of the law was unconstitutional, and as such any decisions or actions deriving from it – the docking of the pensions – are invalid.
The ruling means the plaintiffs, all of whom are on multiple pensions, will now retroactively and effective immediately receive their benefits in full.
In joined cases heard at the Administrative Court, Afxentis Afxentiou, Christodoulos Veniamin, Dina Akkelidou, Iliana Nicolaou, Costas Papacostas (now deceased) and Petros Stylianou, had mounted a challenge to the law, under which civil service pensions were included in calculating the pensionable earnings of state officials.
In curtailing the pension payouts to the six, the treasury cited the law passed in January 2013 which aimed to save the state cash by reforming and modernizing the pension system.
During the hearings, the government tried to argue that this was in the public interest, which in certain cases may supersede the right to property.
But the government lawyers were under the cosh, as back in October 2014 the Supreme Court had already ruled that a pension should be considered as property and as such comes under the protection of Article 23 of the constitution.
In its own finding, the Administrative Court largely drew on that legal precedent.
Article 23 states: “Restrictions or limitations [on the right to private property] which are absolutely necessary in the interest of the public safety or the public health or the public morals or the town and country planning or the development and utilisation of any property to the promotion of the public benefit or for the protection of the rights of others may be imposed by law on the exercise of such right.”
The Administrative Court noted that Article 23 of makes no mention of the public interest per se.
It moreover observed that the contentious law restricting pension payouts does not spell out in what way the public interest is served by docking pensions, merely that its purpose is to rationalise the pension system.
“The need to restrict a fundamental right (such as the right to property) must not only be extant but also derive from a pressing societal need. Only by ascertaining that such a need exists and specifying the nature of this need, are restrictions to fundamental rights warranted.”
The court repeatedly stressed that the plaintiffs’ pension rights had been ‘crystallised’. Crystallised pension rights are pension benefits that an individual has already become entitled to from any pension arrangements.
It also threw cold water on the government’s reasoning that the plaintiffs’ full pension payouts had been merely suspended, not denied altogether. The court said this was irrelevant.
The plaintiffs were challenging certain provisions of a law passed as an amendment to the State Officials on Pensions (General Provisions) Act of 2011.
The latter stipulated that the total pension payout amount cannot exceed half the pensionable earnings for any of the pensions concerned.
But the 2011 law stopped short of going all the way by exempting pensions for civil servants. The lapse was corrected in the amending law passed in January 2013.
Previously, supposing someone had held two different positions as a state official and in addition served in the civil service, the first two pensions would be offset against each other, but the third pension (for the civil service) would be paid on top of these two, in full.
With the amending law, in 2013, the civil service pension was included in the offsetting exercise – resulting in a significant reduction in the overall payout.
The plaintiffs were challenging the offsetting rule in the law.
Afxentiou is on three pensions, having served as permanent secretary at the finance ministry, as minister of finance and as Central Bank governor from 1982-2002.
What’s more, on his retirement about a decade ago, he got a bonus, or lump-sum payment – to which he had contributed nothing – of some 150,000 Cyprus pounds, or €255,000.
Akkelidou is on two pensions, having served as director of the state lab and as minister of health.
Veniamin, aged 93, is understood to receive two pensions, one each for the positions of permanent secretary (ministry of the interior), and one for having served as minister of the interior and as defence minister.
Standing in as trustee for the late former defence minister Papacostas, who passed in September of 2015, was his son Nicholas.
Having the lost this case as well, the state will be called to make additional retroactive pension payments of €600,000 per year relating to dozens of state officials beyond the six plaintiffs.