Dorita Yiannakou
Nicosia Municipality has announced a voluntary early retirement scheme aimed at reducing its fixed costs. The scheme allows for the departure of up to 25 employees, covering both permanent staff and those on indefinite-term contracts.
Kathimerini understands that the municipal council approved the scheme at its meeting on Oct. 8, 2026, setting a maximum compensation payment of €150,000. Employees must meet specific eligibility criteria and submit their applications by the end of 2026.
Tax-free compensation of up to €150,000 available, applications close at the end of the year
Permanent employees must have completed at least 20 years of actual service with the municipality by the date the scheme was announced. Employees on indefinite-term contracts must have at least 10 years of service.
Applicants must also be at least 50 years old when they leave and have more than 12 months remaining before their normal retirement date. Participation is voluntary, and successful applicants must leave by the end of April 2027.
Compensation will be calculated at 30% of the salary employees would otherwise receive between their departure and their normal retirement date, capped at €150,000. The payment will be exempt from income tax but subject to contributions to the General Healthcare System, known as GeSY.
Compensation will be paid in five equal annual installments within five years of the scheme’s implementation.
Nicosia Mayor Charalambos Prountzos told Kathimerini that the initiative forms part of efforts to improve the municipality’s financial sustainability and efficiency by reducing fixed costs and making better use of available resources.
The initiative draws on a financial sustainability and restructuring study conducted by KPMG and funded by the municipality. The study identified key spending areas where savings could be made, including staffing, electricity, vehicle maintenance, and fuel, Prountzos said.
As part of its response to the recommendations, the municipality has already established an energy community and is now moving forward with the voluntary retirement scheme.
Prountzos said reducing fixed costs is an important part of the municipality’s broader restructuring following local government reform, which left the newly formed municipalities with greater operational needs and additional financial obligations.
He argued that the government should have included financial support for such schemes in the reform, allowing the new municipalities to operate efficiently, benefit from economies of scale, and reduce their running costs.
The KPMG study identified a scope to reduce the specified costs by about 10%. However, Prountzos said the Finance Ministry has yet to approve funding for the retirement scheme, limiting how widely the municipality can implement it.
The municipality is therefore proceeding with a scheme tailored to its current finances, balancing the need to cut spending with the need to keep municipal services running smoothly.
The scheme applies exclusively to salaried staff and does not cover hourly-paid workers.
According to information provided to Kathimerini, employees have already shown considerable interest. However, decisions will be made after the application deadline and an assessment of submissions, taking into account the services’ actual needs, staff skills and qualifications, and the municipality’s financial capacity.
