The cabinet on Wednesday approved amendments to the bill regulating multiple pensions for state officials, removing a provision that would have taxed retirement lump sums.

Following the meeting, Government Spokesman Konstantinos Letymbiotis told journalists that the finance minister had been authorised to return the amended bill to parliament for approval.

Among the key changes is the removal of a proposed 15 per cent tax on lump sums granted to state officials upon retirement.

Additionally, it was decided that the formula for calculating the lump sum for retiring MPs will be based on one third of their final salary, instead of one quarter, as the previous version of the bill had stipulated.

“We hope that the discussion in the House of Representatives will continue as quickly as possible, so that it can be voted into law and an issue that has been raised on the agenda at the initiative of the government can be resolved… an issue that has been discussed in our country since the 1980s,” Letymbiotis said.

“With these two amendments, which will be placed before the House of Representatives, we hope we will finally have an outcome to an issue that we have been discussing in the public sphere for over 40 years,” he added.

It remains unclear when the package of bills will go to the House plenum for a vote. Parliament is due to recess before the end of July.

Before that, the finance minister will send the amended bill back to the House finance committee, possibly as early as Thursday in an extraordinary session.

Lawmakers have for months grappled with what to do about the multiple pensions paid to state officials, or the fact that certain officials keep drawing a salary while receiving a pension.

The matter affects a relatively small group. In March, MPs were told that 98 individuals who have served in the public sector are currently receiving more than one pension — or a pension in addition to a salary. In a few cases, retired officials are receiving three pensions.

The attorney-general’s office has already warned that some of the proposals may be unconstitutional and risk being overturned by the supreme court.

Under the government’s plan, state officials would receive a taxable one-time ‘gratuity’ upon retirement, instead of the current arrangement that includes a pension and a one-off bonus.

An important caveat is that the new system for a one-time ‘gratuity’ will apply to state officials appointed after this legislation is enacted. Currently serving state officials will continue to be eligible for monthly pensions plus a one-time bonus once they retire.

Back in 2011 parliament had passed a law prohibiting the payment of multiple pensions to any state official – other than those listed in a 1980 law.

Under the Pensions (Certain Officials of the Republic) Law of 1980, the pensions of the president, the House speaker, ministers, junior ministers, MPs and generally of state officials are suspended if they undertake any other function or office in the Republic.

However, in 2014, the 2011 law was found unconstitutional on the basis that pensions constitute personal property. The 1980 law, however, remains in force.

The issue resurfaced in 2023 following revelations that President Nikos Christodoulides and some members of his cabinet were receiving public sector pensions from previous service while also drawing salaries in their current posts.