Solving pensions problem should be a priority for government

 

THE Cyprus Chamber of Commerce and Industry (KEVE) yesterday said resolving the state pensions problem should be the government’s priority when it discussed measures today with political parties.

“Conditions are ripe, views have been expressed repeatedly and the actuarial study takes away any arguments for the need of additional studies,” KEVE chairman Manthos Mavromatis said.

The study had been ordered by the government in an effort to resolve the unsustainable state pensions system.

Citing the study, Mavromatis said state pensions currently make up 34.3 per cent of the state payroll but at the same time civil servants contribute little towards their pensions.

If civil servants pay their share of the cost of their pensions as private sector workers already do to the social insurance fund, then they would have to contribute 12.2 per cent of their salaries for the “generous pensions they will collect in the future,” Mavromatis said.

He said the state and broader state payroll is over €3.0 billion and a 12.2 per cent contribution will save €370 million each year.

Mavromatis said the state sector is not justified to have a more favourable treatment “since they have the huge advantage of permanent employment and no worries for what tomorrow will bring like their private sector colleagues. Neither will they ever suffer the consequences of the crisis as experienced by 27,000 unemployed private sector workers.”

Civil servants receive two pensions – one from the government towards which they do not contribute anything and one from the social insurance fund to which they pay a monthly contribution of around half the 6.10 per cent contributed by private sector workers.

The rest is footed by the government.

Among the measures studied by the government is for a small contribution by civil servants towards their pension.

 

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