The state expects to generate savings of some €50m over a 20-year period via a scheme where certain civil servants will receive full benefits if they retire early.
Legislation drafted for this purpose concerns 4,088 eligible individuals employed by the central government or the broader public sector.
These are persons who will either have five more years to go until their mandatory retirement age, or who will have completed 400 months of pensionable service by August 31 of this year.
Under the proposal, eligible civil servants will have a 45-day window in which to apply for the specific early retirement plan. If they do, they will be spared a 12 per cent deduction on pension benefits that normally applies for services rendered since January 1, 2013.
In short, the individuals concerned would get their full retirement benefits if they opt in for this scheme.
According to Marinos Theodosiou, the actuarial officer who compiled the proposal, the additional cost to the state of waiving the 12 per cent deduction is estimated at €50m, at an assumed life expectancy of 82 years.
However, the overall savings are calculated at €106m, for a net gain of €56m over an approximately 20-year period.
Finance Minister Constantinos Petrides told MPs on Monday the scheme would make way for new hires to replace older and highly paid civil servants.
Initially the scheme was targeted only for public school teachers, but upon legal advice the government extended it to all civil servants and people employed in the public sector.
In addition, the government is drafting legislation that introduces a new category of civil servants retiring early.
The new category is called ‘termination of services’ and applies to those employees who are forced to retire for having committed serious infractions.
It is a midway proposal compared to outright sacking – an extremely rare occurrence in the public sector.
MPs heard that during the last five years, just two people were fired and 12 others were forced to retire.
So far, civil servants forced to retire due to infractions- no matter their severity – were entitled to full pension benefits. But under the new system being proposed, in cases of serious infractions they would see a deduction in their benefits.