British ex-pats can nominate non-Cypriot bank accounts for pensions to avoid levy
Cahal Milmo is the chief reporter of The Independent and has been with the paper since 2000. He was born in London and previously worked at the Press Association news agency. He has reported on assignment at home and abroad, including Rwanda, Sudan and Burkina Faso, the phone hacking scandal and the London Olympics. In his spare time he is a keen runner and cyclist, and keeps an allotment.
Monday 18 March 2013
Thousands of British ex-pats living in Cyprus will have their pensions temporarily halted and can nominate non-Cypriot bank accounts to ensure payments are not affected by the country’s controversial levy on savings, the Government announced today.
As British Cypriots and ex-pats alike cried foul over the proposed one-off tax on deposits, the Treasury reiterated its pledge to reimburse British military personnel based in Cyprus and insisted it was trying to help pensioners among the 60,000 Britons living on the Mediterranean island.
Treasury minister Greg Clark said a temporary halt had been put on state pension payments until at least tomorrow to prevent money being paid into accounts held by Cypriot banks which are closed until Thursday and Britons would be able to nominate a new account to receive their funds.
He told the Commons: “The way is open for British pensioners to have their pension paid into a different account. Their pensions are safe. We will make sure of that.”
Cyprus is home to a substantial UK population with retirees, owners of holidays homes and a large number of businesses run by British Cypriots. It is estimated they hold deposits of about £1.7bn in Cypriot banks, exposing them to a levy of about £115m. Other UK investors are likely to have been attracted by interest rates with Cypriot banks which are substantially higher than in the UK, with many offering returns of up to six per cent.
Mr Clark said the bill for compensating 3,000 members of the British forces and other civil servants working in Cyprus was not yet known because the terms of the levy and the method of reimbursement had yet to be finalised.
The Financial Secretary said he was “scandalised” at the emergence of the levy plan but insisted that there was no need for Britons living in other Eurozone countries to transfer their funds back to Britain. He said: “The European Central Bank has said the situation in Cyprus is unique and a study of the situation in Cyprus would confirm that.”
Members of Britain’s 250,000-strong Cypriot community echoed frustration at the imposition of the levy, which is expected to modified to lessen its impact on those with smaller savings. Under proposals announced this weekend, a levy of 6.75 per cent would be paid on all deposits up to 100,000 euros.
Harry Sophoclides, a civil engineer and president of the World Federation of Cypriots Overseas, said: “Feelings are very strong - nobody feels relaxed about having money which is theirs taken away from them. Interest rates are higher in Cyprus than in the UK so a lot of people put some savings over there. On one level, that is a risk you take but nobody wants their money taken by force.”
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