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The Fiscal Burden of the Legacy of the Civil Service Pension Systems in Northern Cyprus

Author

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  • Glenn P. Jenkins

    (Department of Economics, Queen's University, Canada, Eastern Mediterranean University, North Cyprus)

  • Hasan U. Altiok

    (Eastern Mediterranean University, North Cyprus)

Abstract

This paper estimates the fiscal burden of the Pay-As-You-Go (PAYGO) civil service pension systems that were closed in 2008 to new members in North Cyprus. At that time, a new pension system was introduced for the newly hired government employees and new private sector workers. Estimates are made of the difference between the present values of future contributions and the pension benefits. This approach measures the government’s net liabilities related to the accruals of the pension rights received by the individuals covered through these plans for the period from 2009 to the death of the last member in the system. The estimated unfunded cost of these civil service pension plans is 7.3 billion euros or 276% of GDP. This amount of implicit debt is significantly higher than 5.8 billion euros that has been estimated as the amount of cash compensation for land and property that would need to be paid in order to reach an agreement for a solution to the Cyprus conflict.

Suggested Citation

  • Glenn P. Jenkins & Hasan U. Altiok, 2013. "The Fiscal Burden of the Legacy of the Civil Service Pension Systems in Northern Cyprus," Development Discussion Papers 2013-06, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:230
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    References listed on IDEAS

    as
    1. Heikki Oksanen, 2004. "Pension reforms: an illustrated basic analysis," European Economy - Economic Papers 2008 - 2015 201, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    2. Disney, Richard, 2000. "Crises in Public Pension Programmes in OECD: What Are the Reform Options?," Economic Journal, Royal Economic Society, vol. 110(461), pages 1-23, February.
    3. Oksanen, Heikki, 2005. "Public pensions in the national accounts and public finance targets," Journal of Pension Economics and Finance, Cambridge University Press, vol. 4(3), pages 291-312, November.
    4. Robert Novy‐Marx & Joshua Rauh, 2011. "Public Pension Promises: How Big Are They and What Are They Worth?," Journal of Finance, American Finance Association, vol. 66(4), pages 1211-1249, August.
    5. Jeffrey R. Brown & Robert Clark & Joshua Rauh, 2011. "The Economics of State and Local Public Pensions," NBER Working Papers 16792, National Bureau of Economic Research, Inc.
    6. Palacios, Robert, 2006. "Civil-service pension schemes around the world," MPRA Paper 14796, University Library of Munich, Germany.
    7. Jeffrey R. Brown & Robert L. Clark, 2011. "The Economics of State and Local Pensions," NBER Books, National Bureau of Economic Research, Inc, number brow11-1.
    8. Heikki Oksanen, 2004. "Pension Reforms: An Illustrated Basic Analysis," CESifo Economic Studies, CESifo Group, vol. 50(3), pages 569-625.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Amin Sokhanvar & Glenn P. Jenkins & Hasan Ulas Altiok, 2019. "The Political Economy of the Taxation of Individuals in North Cyprus," Development Discussion Papers 2019-01, JDI Executive Programs.
    2. Hasan U. Altiok & Glenn Jenkins, "undated". "The Pension Traps of Northern Cyprus," Development Discussion Papers 2012-03, JDI Executive Programs.
    3. Hasan U. Altiok & Glenn Jenkins, 2012. "Social Security Reforms in Northern Cyprus: Are they Fiscally Balanced and Socially Equitable?," Development Discussion Papers 2012-02, JDI Executive Programs.
    4. Hasan Ulas Altiok & Amin Sokhanvar & Glenn P. Jenkins, 2024. "The social security pension system of north Cyprus: analysis of deficits and inequities with proposals for sustainability and fairness," Development Discussion Papers 2024-01, JDI Executive Programs.

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    More about this item

    Keywords

    civil service pensions; pension liabilities; implicit pension debt; pension indexing; North Cyprus;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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