Government Employees Pension Scheme (GEPS) (Closed Scheme)

Κυβερνητικό Σχέδιο Συντάξεων

Coverage

Mandatory insurance

All civil servants of the public service, in the Audit Office, in the Treasury of the Republic, members of the educational service, the security forces, the armed forces, as well as members of the judiciary service of the Republic, the Attorney-General and the Deputy Attorney-General.
The scheme has been closed for new appointees in the civil service since 1 October 2011.¹

Financing

General finances

Mainly tax-financed out of the state budget.
Following the financial crisis, partly financed on a PAYG basis through contributions of civil servants and employees in the wider public sector (e.g. independent service or authority or office of an independent official, any public sector entity) (3% of salary).

Administration

Treasury of the Republic of Cyprus.

Qualifying Conditions

Qualifying conditions

Old age benefits are payable to a beneficiary upon reaching the statutory pensionable age.
Statutory retirement age increases to 65 for beneficiaries (exception: medical officers) born after 1952; minimum service period: 5 years; retirement age is adjusted every 5 years from 2018 onwards by law, based on changes in life expectancy at statutory retirement age.

Early retirement

Elementary and high school teachers can retire earlier (ranging from 62 years and 6 months to 65 years of age) if specific prerequisites are met.
Members of the armed forces can retire earlier (ranging from 55 to 57 years of age) if specific prerequisites relating to their rank and years of service are met.
Members of the police can also retire earlier if specific prerequisites relating to their rank and years of service are met, in accordance with relevant regulations.

Benefits

Pension benefits

The scheme provides supplementary pensions to its beneficiaries, and a lump sum amount/gratuity.
Maximum amount: The annual pension paid cannot exceed 1/2 of the pensioner’s annual earnings.

Pension calculation

For service prior to 1 January 2013: (a) the annual pension is based on the annual retirement earnings and the number of months of service, i.e. the annual pension corresponds to the annual retirement earnings multiplied by the number of months of service and divided by 800; (b) the lump sum pension equals the annual pension multiplied by 14 and divided by three.
For service from 1 January 2013: (a) the annual pension is based on the average gross pensionable earnings of all months of pensionable service up to the date of the retirement, adjusted to the value of one insurance point of the ‘Social Insurance Fund’ for every completed month of pensionable service; i.e. the annual pension is equal to the average gross pensionable earnings multiplied by the number of months of service since 2013 and divided by 800; (b) the lump sum pension equals the annual pension multiplied by 14 and divided by three.

Taxation and social security contributions

Pension benefits may be subject to taxation, in accordance with the Income Tax Law (Law 118(I)/2002) in the event that total annual pension amount exceeds EUR 19,500.
Any lump sum or gratuity received for service prior to 2013 is not subject to income tax.
Any lump sum or benefit received for service from 01/01/2013 onwards is subject to income tax.
Contributions to public health insurance are mandatory (2.65% of pension benefit for the Cypriot General Health System).

Coverage

Financing

Administration

Qualifying Conditions

Benefits

Mandatory insurance

All civil servants of the public service, in the Audit Office, in the Treasury of the Republic, members of the educational service, the security forces, the armed forces, as well as members of the judiciary service of the Republic, the Attorney-General and the Deputy Attorney-General.
The scheme has been closed for new appointees in the civil service since 1 October 2011.¹

General finances

Mainly tax-financed out of the state budget.
Following the financial crisis, partly financed on a PAYG basis through contributions of civil servants and employees in the wider public sector (e.g. independent service or authority or office of an independent official, any public sector entity) (3% of salary).

Treasury of the Republic of Cyprus.

Qualifying conditions

Old age benefits are payable to a beneficiary upon reaching the statutory pensionable age.
Statutory retirement age increases to 65 for beneficiaries (exception: medical officers) born after 1952; minimum service period: 5 years; retirement age is adjusted every 5 years from 2018 onwards by law, based on changes in life expectancy at statutory retirement age.

Early retirement

Elementary and high school teachers can retire earlier (ranging from 62 years and 6 months to 65 years of age) if specific prerequisites are met.
Members of the armed forces can retire earlier (ranging from 55 to 57 years of age) if specific prerequisites relating to their rank and years of service are met.
Members of the police can also retire earlier if specific prerequisites relating to their rank and years of service are met, in accordance with relevant regulations.

Pension benefits

The scheme provides supplementary pensions to its beneficiaries, and a lump sum amount/gratuity.
Maximum amount: The annual pension paid cannot exceed 1/2 of the pensioner’s annual earnings.

Pension calculation

For service prior to 1 January 2013: (a) the annual pension is based on the annual retirement earnings and the number of months of service, i.e. the annual pension corresponds to the annual retirement earnings multiplied by the number of months of service and divided by 800; (b) the lump sum pension equals the annual pension multiplied by 14 and divided by three.
For service from 1 January 2013: (a) the annual pension is based on the average gross pensionable earnings of all months of pensionable service up to the date of the retirement, adjusted to the value of one insurance point of the ‘Social Insurance Fund’ for every completed month of pensionable service; i.e. the annual pension is equal to the average gross pensionable earnings multiplied by the number of months of service since 2013 and divided by 800; (b) the lump sum pension equals the annual pension multiplied by 14 and divided by three.

Taxation and social security contributions

Pension benefits may be subject to taxation, in accordance with the Income Tax Law (Law 118(I)/2002) in the event that total annual pension amount exceeds EUR 19,500.
Any lump sum or gratuity received for service prior to 2013 is not subject to income tax.
Any lump sum or benefit received for service from 01/01/2013 onwards is subject to income tax.
Contributions to public health insurance are mandatory (2.65% of pension benefit for the Cypriot General Health System).

¹ The GEPS was heavily affected by the financial crisis and was extensively reformed for the purpose of preserving fiscal sustainability.

Legal Basis: Pensions Law (Law 97(I) of 1997) (Ο περί Συντάξεως Νόμος του 1997 (N. 97(I)/1997)); Retirement Benefits of State Employees and of Employees of the Broader Public Sector, including Authorities of Local Government (Provisions of General Application) Law of 2012 (Law 216(I) of 2012) (Ο Περί Συνταξιοδοτικών Ωφελημάτων Κρατικών Υπαλλήλων και Υπαλλήλων του Ευρύτερου Δημόσιου Τομέα περιλαμβανομένων και των Αρχών Τοπικής Αυτοδιοίκησης (Διατάξεις Γενικής Εφαρμογής) Νόμος του 2012 (N. 216(Ι)/2012)); Members of the Armed Forces of the Republic (Retirement and Related Matters) (General Provisions) Law (Law 215(I) of 2012) (Ο Περί των Μελών του Στρατού της Δημοκρατίας (Αφυπηρέτηση και Συναφή Θέματα) (Διατάξεις Γενικής Εφαρμογής) Νόμος του 2012 (N.215(I)/2012)); Police Law (Law 73(I)/2004) (Ο Περί Αστυνομίας Νόμος του 2004 (N. 73(I)/2004)), Armed Forces of the Republic Law (Law 36(I)/2016) (Ο περί Στρατού της Δημοκρατίας Νόμος (Ν. 36(I)/2016)).