State Pension Plan in Cyprus

The state pension system in Cyprus was set up in three pillars divided between private and public initiatives, which have recently been renamed to better classify their purpose.

• General Social Insurance Scheme – Contributions by employers and employees intended to cover basic needs for pensioners.
• Government Employees Pension Scheme & Public Sector Employees Pension Schemes – These schemes are intended for civil servants, as well as permanent employees of public utility organizations, local governments, and others.
• Voluntary Provident Funds – Available for retirees from certain occupations that operate with free collective bargaining.
• Individual Insurance Pension Plans – These are private pension plans funded by the insured's premiums, and possibly investment in various schemes whose profits the insured person can collect upon retirement.
  

The government has also introduced a Special Allowance Scheme for pensioners whose income is below a certain amount.

Most expats working in Cyprus will contribute to, and collect on, the General Social Insurance Scheme listed above.

Who is Eligible for a Cypriot Pension?

Employed, self-employed and voluntary contributors in Cyprus are entitled to a Cypriot pension when they reach the age of 65, or if they satisfy stricter insurance conditions, as young as 63 years old.

In order to be covered once reaching the required age, you must have legally resided in Cyprus, the EU, the EEA (European Economic Area) or Switzerland for 20 years after reaching the age of 40, or for at least 35 years from the age of 18.

Contributions for a Cypriot Pension

Contributions are compulsory for all employees, employers, and self-employed people in Cyprus. The overall rate of contribution is 17.9%, but it is divided between the employee, the employer, and the government.

Self-employed workers contribute 12.6% of their income every three months, while the Cypriot state contributes 4.3%. Employees of a company pay 6.8% of their earnings, while their employer pays the other 6.8% and the state supplements the rest.

Benefits of a Cypriot Pension

A monthly social pension in Cyprus is equal to 81% of the full basic pension payable under Social Insurance legislation (around 340 Euros).

Company Pension Plan

You are unlikely to work for a Cypriot company with its own pension plan in addition to the general social insurance scheme.

Any company that has instituted a company pension plan will usually give you the option to opt in or opt out of the company's group plan, so participation is usually not compulsory. Depending on the specific plan's rules, you will contribute a certain percentage of your salary to the company-wide scheme.

Private Pension Plan

There are private pension plans to choose from in Cyprus for individuals, for which they pay regular insurance premiums, or invest in various schemes, and collect the profits or premiums plus interest once they reach the age of retirement.

Money from private pension plans can be collected in one lump sum, or annually as a pension.

Certain occupations, especially those in which collective bargaining maintains a strong presence, also usually provides for some sort of private pension plans whose benefits are to be collected at the age of 65.

Expat Pension Plan

Besides Cyprus' general pension plan agreement with the rest of the EU and EEA countries, there are also bilateral agreements in place with other countries for social insurance rights. These countries include Australia, Canada, Egypt, Syria, and the UK.

If you are an expat from the EU, the time you spent in the EU simply aggregates with the time spent in Cyprus to help qualify you for pension collection at the proper age.

If you are an expat from one of the other countries Cyprus has bilateral agreements with, check for the specific terms of your two countries' agreement in order to better understand how to contribute and collect to your pension scheme.

Contributing and Collecting Pension while Abroad

If you are a resident of one of the countries Cyprus has entered into bilateral agreements with, you may be able to contribute to your pension scheme back home and collect under their terms when the time comes.

If you are a former resident of the EU in Cyprus, as long as your last contributions towards social insurance were made in Cyprus, you can collect without any problems under the Cypriot General Social Insurance Scheme. If your last contribution was made in the country you emigrated from, you can collect under their social insurance scheme while in Cyprus.

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