ATTORNEY-general Petros Clerides yesterday did an about-turn over a disagreement with international lenders in interpreting a provision that changes the way civil service pensions are calculated as part of the island’s bailout.
The difference was whether the new system would be retroactive or if it would only affect earnings after January 1, 2013 when it comes into force.
During a discussion at the House Finance Committee on Monday, Clerides appeared certain that it was the latter that had been agreed.
The committee asked the government to clarify the matter before tomorrow when the draft legislation will be put to the vote.
Yesterday however, Clerides sent the committee an urgent letter informing them there was no need to clarify the matter with the troika.
Clerides said certain documents had come to his attention “for the first time” in which the troika clearly interpreted the provision as being retroactive.
“And that the matter was considered closed for the troika,” the attorney-general said.
The memorandum, on which the two sides have agreed in principle, states: “pension benefits will be calculated on a pro-rata basis taking into account life-time service as of January 2013.”
On Monday, Clerides said that his understanding was that pension rights until December 12, 2012 were secure and that the new method would kick in after January 1 of the new year.
Under the current system, a civil servant’s pension is calculated on the basis of their last salary.
“You realise that in light of this development, which I repeat, I did not know about, any new communication with the troika not only would be pointless, but it could, maybe rightly, cause reaction,” Clerides said in his letter.
He added that irrespective of which interpretation was correct, “I think the matter should be considered closed” since any extension in the negotiations would be damaging.
“Thus, in my view, it is advisable that the bill is approved without further delay,” Clerides said.