Public Sector Pensions
The pensions for the public sector are paid through the General Social Insurance Scheme (GSIS) just as the pensions for the private sector employees (made up of a basic pension and a supplementary pension). In addition to the GSIS benefits, the central government employees that include civil servants, members of the educational service, police, and armed forces, are also entitled to additional payments offered by the Government Employees Pension Scheme (GEPS).
The GEPS is funded by the government employees’ contributions of 5% on their gross earnings and the remaining by general taxation on a pay-as-you-go basis. The GEPS provides supplementary retirement and survivors pensions to the central government employees.
The compulsory retirement age according to the GEPS is 63 years, with early retirement allowed from the age of 58 without any actuarial reduction of benefits. The retirement ages for civil servants are: 63 for the civil service, 60 for teachers, between 60 and 61 for police, and for the military servants it ranges between 52 and 60 depending on the position and rank.
The amount of the supplementary pension through the GEPS is calculated on the final salary at an accrual rate of 1.5% per annum which means that the monthly retirement pension is equivalent to 50% of that salary after 33 and 1/3 years of service. When the public sector servant reaches the GSIS pensionable age the GEPS pension is reduced by the amount of the supplementary GSIS pension.
Additionally, a lump sum bonus (known also as EFAPAX) is paid immediately when a public sector employee retires. This amount varies from 4.7 % of the annual pension if the retirement happens at the age of 60 to 5.2 % of the annual pension if the retirement happens at the age of 63.
Since October 1, 2011, GEPS became closed to newcomers of the public sector.
Other Pension Schemes for the Public Sector
There are other occupational pension schemes which provide financial benefits to the permanent employees of semi-state utility organizations, local governments and other public law authorities under the same terms and conditions as for the central government employees. These pension schemes operate under special laws and are financed by the public sector employee contributions of 5 % on their gross earnings and the rest of the cost by the state. The participation of the public sector employees in financing these schemes is limited to a share in the cost of the survivors´ pensions. It is estimated that the total number of employees covered under these schemes is around 7500.
Examples of such schemes are the Broader Public Sector Pensions (BPSS) which cover the local governments and a variety of public entities outside the central government including the public corporations (about 0.5 percent of GDP), the Public Sector Employees Pension Schemes (PSEPS) and the non-contributory pension schemes (1 percent of GDP). Benefits are provided under the same terms and conditions as for the central government employees, and the formula to calculate the pension is also the same.
The last reform of the pension schemes for the public sector employees was in August 2011. The reform aimed at reducing the cost of the government employees’ schemes and improving equity with private sector employees. The main measures were an increase in the permanent contribution rate for public employees from the previously 0.8% to 5.1% of the gross earnings, the abolition of access to public sector schemes for new public sector workers, and the indexation of pensions in the payment for inflation only. Moreover, an additional temporary contribution for the employees and pensioners of the public sector was also imposed, based on their income.