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Pensions and state salaries paid together ‘illegal’

general view of the presidential palace in nicosia

In a report released Tuesday, the auditor-general’s office again raised the matter of the simultaneous payment of salaries and pensions to currently serving state officials, calling on the Treasury to cease this practice at once.

The remarks came in the Audit Office’s special report on the Treasury for the year 2022. The Treasury is urged to “immediately cease the payment of pensions to currently serving state officials… which is being done in express violation of the relevant laws”.

It added: “No illegal pension should be paid out for the month of January 2024 and thereafter.”

Citing the applicable law, the Audit Office said the payment of pensions should have been suspended for the time during which these officials drew a salary.

Earlier this month, the Treasury said it would resume paying the pensions of currently serving state officials, following legal advice from the attorney-general’s office.

About 160 state officials, retired and currently serving, are on multiple pensions. For example, there are state officials like the president and four ministers who are collecting a state pension while also being paid a state salary.

Despite an attempt by the legislature to end this state of affairs, a law it passed in 2014 was later ruled unconstitutional by the courts on the grounds that a pension was the property of its recipient and could not be taken away.

Elsewhere in the dossier, the Treasury is said to practice “accounting practices… not commensurate with the accounting principle of receipts and payments, on the basis of which financial statements were compiled”.

And the report noted that the public-sector wage cuts stipulated in the 2013 bailout deal with international lenders were not applied to the salaries of judges hired after the passage of the relevant legislation. This state of affairs – exempting judges from the wage cuts – went on until August of 2021.

Another point flagged has to do with the Treasury not properly checking adherence to all the provisions of schemes for subsidised loans for businesses or for new home loans, rolled out by the government as part of relief measures during the coronavirus pandemic.

Here again, the Audit Office found “cases where for the Treasury’s receipts no supporting documentation is attached, other than the credit note from the Central Bank and/or receipts that bear no indication of checks having been done.

“As a result, it was not possible to ascertain whether the Treasury secured all the necessary data and checked the accuracy of the amount at the material time of the receipt.”

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