Despite government misgivings, lawmakers said on Tuesday they are pressing ahead with drafting a new scheme for people in arrears with their social insurance contributions.
The aim of the legislative proposal, said MP Andreas Fakondis (Akel), is to assist individuals who were unable to benefit from the current scheme that allows for the repayment of social insurance arrears in 54 monthly instalments in exchange for extinguishing late penalties.
But government officials were skeptical, telling parliamentarians that the current scheme – which will lapse in 16 months’ time – should be allowed to run its course before a new plan were introduced.
Fakondis said the new scheme will include safeguards to ensure people benefiting from the current plan are not entitled to the same relief a second time.
He called on the labour ministry to provide feedback on a bill already tabled by MPs, assuring the government its concerns would be taken on board.
The problem identified with the current scheme is that, under relevant guidance issued by the Social Insurance Department, in order for people to start paying running contributions they must first have settled their overdue contributions.
This creates a debt spiral for persons in arrears, as in some cases late charges for failure to pay current contributions can reach up to 27 per cent.
It was therefore imperative to address this flaw, Fakondis said.
According to the MP, to date about €51m has been collected under the instalments scheme.