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Cyprus

Discussion on new bill to settle social insurance arrears wraps up

Lawmakers on Tuesday wrapped up discussion of a government bill introducing a new scheme for settling arrears in social insurance contributions, with a view to taking the item to the House plenum by mid-April.

House labour committee chair Andreas Fakondis (Akel) said MPs have managed to persuade the government – despite its misgivings – to include in the new scheme those who enrolled in the previous (current) scheme but then dropped out at some point.

But safeguards would be put in place to ensure that these individuals don’t benefit unduly.

People who had enrolled previously and benefited from discounts, can re-enroll but the discounts will be added to their amounts due. The labour ministry will need to modify its IT system accordingly to track such cases.

Those who had participated in the earlier scheme and quit but benefited from no discount can re-apply immediately once the new scheme is rolled out.

The programme provides for the repayment of social insurance arrears in 54 monthly instalments in exchange for extinguishing late penalties/interest.

Anyone missing three instalments will be automatically disqualified.

The new bill fixes a flaw with the previous scheme, which provided that in order for people to start paying running contributions they must first have settled their arrears.

This created a debt spiral for people in arrears, as in some cases late charges for failure to pay current contributions went up to 27 per cent.

Now, with an amendment, repayment of all delayed contributions in one go will extinguish all penalties; and repayment in less than 54 instalments reduces the penalties proportionately.

According to Fakondis, some 900 people remain in the current scheme, which had started out with 3,000 applicants. Approximately €55 million was collected.

The MP expected the new scheme would draw even greater interest.

The measure is also linked to the ongoing financial difficulty faced by many due to the coronavirus-related restrictions.

Greens deputy Giorgos Perdikis said that, in tandem, lawmakers are pushing forward an extension to a scheme for repayment of income tax arrears.

He noted that, according to a 2019 letter by the auditor-general, some MPs would also benefit from this programme.

Perdikis said any legislators benefiting should declare so before the House plenum when the bill comes up for a vote.

In other business, the labour committee considered legislation allowing those aged 63 and over, and who have not applied for a pension, to become eligible for the sickness allowance.

The relevant bill, as tabled by the government, contains too many prohibitive safeguards, creating unfair treatment of payers, Akel’s Fakondis said.

For instance, someone who is 62 years old may apply for sickness allowance if during the previous year they have contributed – in other words being unemployed in 2021, but having contributed in 2020, makes them eligible for the allowance.

But a person who is already 63 years old, did not apply for the right to a pension and is unemployed, is currently ineligible for the allowance.

This disparity should be rectified, the MP said.

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