So­cial in­sur­ance: you pays your money if you want a choice

Financial Mirror (Cyprus) - - COMMENT - By Michael Do­herty

You pays your money and you takes your choice: the old cry of the Cock­ney mar­ket ven­dor could be good ad­vice for Bri­tish ex­pats pon­der­ing the so­cial in­sur­ance sys­tem in Cyprus. You’ll pay your money, come what may, but you will need to pay some more if you want a choice. The Repub­lic of Cyprus has a com­pre­hen­sive so­cial se­cu­rity scheme. It is com­pul­sory. Ev­ery­one who is work­ing in Cyprus must pay into it.

How much you pay, de­pends on how much you earn and whether you are self-em­ployed. But, as a rough guide, you can say that any ex­pat work­ing in Cyprus will be con­tribut­ing some­thing over 7% of their salary to the fund. Con­tri­bu­tions by em­ploy­ers and the State will bring this to around 20% of salary.

On the face of it, this is a gen­er­ous scheme which pro­vides for a wide range of ben­e­fits, in­clud­ing ma­ter­nity grants, ma­ter­nity al­lowance, funeral grants, sick­ness ben­e­fit, un­em­ploy­ment ben­e­fit and old age pen­sions.

How­ever, many of these ben­e­fits are of lit­tle value to ex­pats. The funeral grant, for in­stance, which comes to less than EUR 1,000. That may just about cover the cost of burial for Cypri­ots, with a fam­ily grave space, but it comes nowhere near the es­ti­mated EUR 10,000 that burial costs an ex­pat fam­ily.

Health­care and pen­sions are the main items for which an ex­pat is likely to make a claim on so­cial in­sur­ance. Cyprus has a good health sys­tem with an ef­fi­cient network of gen­eral hospi­tals and clin­ics. Nev­er­the­less, most Cypri­ots who can af­ford it take out pri­vate health in­sur­ance, and nearly all ex­pats fol­low suit. This se­cures for them a wider choice of med­i­cal prac­ti­tion­ers and hospi­tals and frees them from pub­lic health wait­ing lists.

Any­one who has paid reg­u­lar so­cial se­cu­rity con­tri­bu­tions in an­other EU coun­try for two full years prior to com­ing to Cyprus is en­ti­tled to pub­lic health cover.

Re­tirees liv­ing in Cyprus and re­ceiv­ing a state pen­sion from an­other EU coun­try are also en­ti­tled to free or sub­sidised health­care. You will need to ob­tain the nec­es­sary forms from your home coun­try and sub­mit them with your ap­pli­ca­tion for a med­i­cal card in Cyprus. In the UK, you should con­tact the Depart­ment of Work and Pen­sions (DWP), Med­i­cal Ben­e­fits Sec­tion.

Ev­ery­one who has con­trib­uted to the so­cial in­sur­ance scheme in Cyprus is en­ti­tled to a Cypriot pen­sion when they reach 65. The State pen­sion plan is com­plex, how­ever, in­volv­ing a num­ber of dif­fer­ent schemes. There is one for civil ser­vants, one for em­ploy­ment gov­erned by col­lec­tive bar­gain­ing and one to ac­com­mo­date pri­vate pen­sion schemes.

Ex­pats work­ing in Cyprus are likely to be el­i­gi­ble un­der the Gen­eral So­cial In­sur­ance Scheme. In or­der to be cov­ered you must have lived in Cyprus, the EU, the EEA or Switzer­land for 20 years af­ter reach­ing the age of 40. Time spent in the EU sim­ply ag­gre­gates with the time spent in Cyprus to help you qual­ify for a pen­sion.

Most ex­pats tend to grav­i­tate to­wards pri­vate pen­sions. They pay reg­u­lar pre­mi­ums, or in­vest in rec­om­mended schemes, and col­lect the prof­its or pre­mi­ums plus in­ter­est once they reach the age of re­tire­ment.

With pen­sions, as with the en­tire field of so­cial in­sur­ance, there is no one size that fits all. The im­por­tant thing is to work out a pack­age that will give you the sort of life­style you want, backed up by the fi­nances needed to make it hap­pen. Good ad­vice is vi­tal.

The Wood­brook Group is an in­ter­na­tional firm of fi­nan­cial ad­vis­ers. We are not owned by any fi­nan­cial in­sti­tu­tion or life in­sur­ance com­pany and can of­fer you un­bi­ased and im­par­tial ad­vice.

We of­fer a free pen­sion re­view to help clients plan for the fu­ture. We can help you un­der­stand your op­tions and how to ad­dress your in­come needs. Michael Do­herty is CEO of the Wood­brook Group, Li­mas­sol www.wood­brook­ con­[email protected]­brook­

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