Cyprus has earmarked nearly half a billion euros in pension spending for 2027, with hundreds of public servants, teachers, police officers, firefighters and military personnel expected to retire during the year, according to the state budget currently before parliament.
Budget figures show that pension expenditure for the four main categories of public sector employees will reach €396.2 million in 2027. A further €69.8 million has been allocated for pensions paid to widows, widowers and orphans of public servants, bringing total pension-related spending in these categories to approximately €466 million.
The figures also point to a significant wave of retirements across the public and broader public sector, driven by employees reaching retirement age as well as early retirements, resignations and other departures.
Public servants account for largest pension bill
The largest allocation, €185 million, has been set aside for pensions paid to retired public servants.
A total of 427 civil servants are expected to leave the public service in 2027, including 307 who will retire upon reaching the statutory retirement age. Around 120 others are expected to retire early, resign or leave for other reasons.
Teachers represent the second-largest category, with pension spending projected at €131.6 million.
The budget anticipates the retirement of 385 public education teachers during 2027, including 325 reaching retirement age and approximately 60 expected to depart through early retirement, resignation or other reasons.
Pensions for police officers and firefighters are budgeted at €48.8 million. A combined 55 members of the two services are expected to retire, including 35 upon reaching retirement age and another 20 through early retirement or other departures.
Pensions for members of the Cyprus military are projected to cost €30.8 million. The budget assumes the retirement of 110 service personnel, including 80 reaching retirement age and around 30 leaving early or departing the National Guard for other reasons.
A further €69.8 million has been allocated for widows', widowers' and orphans' pensions, with around 240 new beneficiaries expected to join the scheme during the year.
Multiple pensions for officials
The budget also includes approximately €6 million for pensions paid to current and former state officials.
While the budget does not specify the number of beneficiaries, recent figures provided by the Treasury show that 71 former state officials receive more than one state pension, with some receiving as many as three separate pensions.
At the same time, 26 serving officials, including ministers, members of parliament and commissioners, receive a monthly pension in addition to their salaries and allowances.
The arrangement stems from provisions of the 1997 Pensions Law, which allows public-sector employees who leave their posts to assume public office to receive a pension from the time they take office, regardless of age.
The provision enabled President Nicos Christodoulides to become entitled to a pension from the age of 45 after leaving the public service to assume elected office.
More than €112 million in retirement gratuities
The 2027 budget also provides for substantial retirement gratuity (lump sum) payments.
Among the allocations are:
- €49 million for gratuities to 427 retiring public servants.
- €44.5 million for gratuities to 385 retiring public education teachers.
- €13.5 million for 110 retiring members of the Cyprus military.
- €5.2 million for 55 retiring police officers and firefighters.
- €300,000 for retiring state officials.
- €600,000 for employees leaving government service after appointment to public-law organisations or other bodies.
- €200,000 for temporary employees, including contract soldiers, retiring voluntarily, on reaching retirement age or following death.
Unlike gratuities paid to public servants and employees of the wider public sector, retirement gratuities paid to state officials are exempt from income tax under current legislation. The exemption remained in place after lawmakers approved tax measures during the financial adjustment programme period, extending the benefit to ministers and deputy ministers who are covered by the same legal framework.
