LEADING DIKO and DISY politicians yesterday declared they would seek to stop the second and sometimes third pensions awarded to retired civil servants even if it cost them valuable votes in next May’s parliamentary elections.
DISY deputy chairman Averof Neophytou and DIKO vice president Nicolas Papadopoulos declared that an important part of the much needed overhaul of the pensions system entails taking decisions on the distortion between private and public sector pensions.
“The economy can’t wait just because there are elections,” said Papadopoulos.
“One of the chapters that needs structural measures is the pensions’ scheme and one of the matters that concerns us the most is the double and treble pensions.”
Neophytou said although changes may cost votes, “some people must speak out, before we turn into Greece and Greece is in our back yard.”
There were growing signs yesterday that a harder line on public sector pensions could even turn into a vote winner rather than the traditional vote loser as the names on an online petition calling for an end to civil servants’ “preferential treatment” and “provocative” bonuses grew to nearly 2,000.
The petition – www.gopetition.com/petition/40684.html – has fast been gathering signatures since it was launched in the middle of last week by a group of businessmen. What with the current financial crisis, recent revelations that former state officials receive multiple pensions depending on the posts they held have fuelled growing discontent from private sector workers.
The examples of former Interior Minister and former Central Bank governor Christodoulos Christodoulou, who receives three pensions worth a total of €147,000 per year, and former Interior Minister Christodoulos Veniamin who gets €108,000 a year in pension benefits, have been widely publicised. The average pension for someone who worked and contributed to the Social Security Fund (SSF) is just over €500 per month.
The fact that two MPs from opposition DISY – the island’s biggest party, along with ruling AKEL – and DIKO, are vehemently opposing the current system could mean improvements can be made, economist Dr Stelios Platis said yesterday.
But he added, “Let us hope they represent their entire parties and that it isn’t just political fireworks.”
“If DIKO and DISY jointly decide, they can pass the measures they desire in Parliament,” Platis said. “So we need to be honest, especially the parliamentary groups of the two parties, over what exactly we want to achieve. I truly believe the fact that this matter is being raised by members of these two parties is a positive thing.”
But he added that the issue was far wider than the generous pensions and other perks awarded to the civil service. “While we are talking of MPs, we should also refer to their request to have their expense allowances taken into consideration when calculating their pensions,” he said, adding that they too are part of a privileged class – around 25 per cent of the public – which are strangling the Cypriot economy.
Neophytou reiterated that the state’s pensions’ scheme in general was a time-bomb in the foundations of the economy.
“Both the government and the parliament agree on this deduction,” said Neophytou. “The Governor of the Central Bank, the IMF, and the European Central Bank, all have the same view and position on the matter. The European Commission classifies our country in the countries at high risk with respect to their pension schemes.”
He said the government fear the potential political costs involved in taking the necessary measures. “And while we all acknowledge that if measures are not taken immediately to address the matter the fear of some possible reactions is making politicians in general back off.”
He said that while half of pensioners currently live below the poverty line, the system has also created a highly privileged class of pensioners.
He includes himself in the latter group as he readily admits he will receive three pensions when he turns 60, due to his previous posts, if the system remains as it is.
The DISY MP compared the pension that would be received by two employees one from the private sector, the other from public sector, who worked the same numbers of years for the same salary.
“Although the employee in the private sector would have contributed double amount in the Social Securities Fund, once he retires he will be receiving a maximum of one third of the pension benefit of the employee in the public sector,” said Neophytou.
Furthermore, public servants are rushing to get promoted – sometimes just months before retirement – as the one-off lump sum they get on retirement is calculated based on the employee’s last salary and not the average wage of the past few years.
Add to all this the fact that a public servant’s widow is entitled to their spouse’s pension until they die, Neophytou said it was high time the “leftist government” came up with proposals to annul these “hyper-privileges”.
Nicolas Papadopoulos said his party planned to meet in coming days to discuss the economy, including the pensions matter, before announcing its unified position on the issue.
He added that populism would lead the Cyprus state to bankruptcy, like it led Greece. “So we need serious and responsible decisions, if we don’t want to go the same way. And we don’t care about the political cost; we care about the economy’s best interests,” he said.
“There is no way DIKO will abandon its principles to secure more votes.”
But will Neophytou and Papadopoulos secure their parties’ backing? Or will the parties buckle under the pressure of vested interests as many have done before them, allowing the situation to get worse?
Platis said effecting such structural changes would most certainly spark reaction from those who stand to lose certain privileges.
But he said it was the role of the parties and the leaders to lead the people through change and not to shield the current state of affairs as they have often done.
“The aim is to look at the future of our children,” Platis said. “Who do we love more? Ourselves or our children? This is the question we need to ask?
“Parties need to change. The whole system with which people are represented in parliament should change,” Platis said.
