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Provident fund in Cyprus


1. The Provident Fund legislation was entered into force on 1.6.1982. Its main objective is to rule the establishment and operation of Provident Funds in order to secure their efficient operation in favour of their members.
2. The responsibility for the implementation of the legislation is entrusted to the Registrar of Provident Funds. By decision of the Minister of Labour and Social Insurance, the Director of Social Insurance has been appointed as the Registrar.

Which Provident Funds are covered by the legislation

3. The legislation covers all Provident Funds or Pension Schemes which:
(a)provide for cash benefits to employed persons in case of termination of employment, permanent incapacity for work, retirement or death, and

(b) are financed by periodical contributions of the employed persons or the employed persons and their employers.

All Funds or schemes which have been established by virtue of a special Law are exempted from the provisions of the Law.

Register of Provident Funds

4. All Provident Funds must be registered in the Register of Provident Funds kept by the Registrar.

5. In order for a Provident Fund to be registered in the Register, the Management Committee or the founders of the Fund must submit an application to the Registrar of Provident Fund on a special form which they can obtain from any Social Insurance Office. The application form must be submitted within 60 days from the establishment of the Fund.

6. The application form shall be accompanied by:

(a) the Rules/the Regulations of the Provident Fund, signed by the applicants,

(b) a statement mentioning the names, addresses and the status of the members of the Management Committee, and

(c) any other documents or information the Registrar may deem necessary for the examination of the application.

7. If the Registrar is satisfied that there are legal reasons and that the memorandum of association is in conformity with the provisions of the legislation, the application for Registration is accepted and the Registrar issues the ‘Registration certificate’. The ‘Registration certificate’ shall be an indisputable evidence for the registration of the provident fund, the date of registration thereof and of the compliance with any legal provisions of the Law. The ‘Registration certificate’ is then sent to the Management Committee of the Fund.

8. Once registered the Provident Fund gains legal personality and as such is legally and financially independent of the employer.

9. If the application for registration is disallowed the Registrar informs accordingly the applicants giving the reasons for his decision.

10. The Registrar has the authority to cancel or revoke a ‘Registration certificate’ if it is proved that the Fund is functioning against the provisions of the law or its Rules/Regulations has ceased to operate. Before the cancellation or the revocation of the Registration certificate the Registrar gives to the Management Committee at least one month’s notification for his intension and the reasons for reaching to this decision.

11. No contributions are collected by a Fund if an application is not submitted within the prescribed time or if the Registration Certificate has been cancelled or revoked.

Rules/Regulations of a Provident Fund

12.The memorandum of association of any Fund shall state:

(a) The name and headquarters of the Provident Fund,

(b) The terms of entry of members and the conditions under which they cease to be members,

(c) The rights and obligations of members,

(d) The Management Committee of the Fund and the terms of governing the election or appointment and dismissal of the members thereof and the responsibilities and terms of functioning thereof,

(e) The terms under which a general meeting of the members may be convened, discuss and make decisions,

(f) The terms under which the memorandum of association may be amended,

(g) The amount or percentage of contributions of the members and of the employer,

(h) The keeping and audit of accounts of the Provident Fund, and

(i) The terms of dissolution thereof.

13. The provisions of the memorandum of association for every provident fund shall be based on the principal of equal treatment, which means the absence of any discrimination, either direct or indirect, particularly in relation to marital or family status.

Management Committee of a Provident Fund

14. The law provides for a Management Committee composed of not less than 3 persons. This committee manages the Fund and represents it legally to court or extrajudicially.

15. The basic responsibilities and obligations of the Management Committee are the following:

(a) To be responsible for the Registration of the Fund in the Register which is kept by the Registrar,

(b) To submit for registration any amendment of the Rules/Regulations, within 15 days from the date of its vote,

(c) To notify the Registrar any change of the members of the Management Committee within ten days from the day such change occurred,

(d) To keep a minute-book, in which the Management Committee shall record fully and precisely all decisions taken in relation to the appointment of officers or employees of the Fund as well as the Auditor, the payments or collections of money, the acquisition or disposal of property, the investment of money and the granting of loans and generally every transaction or action relating to the management and operation of the Fund,

(e) To keep a minute-book, in which the Management Committee shall record for every General Meeting, the number of members present at the meeting, the way of voting and the decisions taken, the way of election and the names of the members of the Management Committee, the decisions related to the amendment of the Rules/Regulations of association and generally any other subject which was conducted at the meeting,

(f) To keep a register of members in which the Management Committee shall record the full name of each member, the dates of each member’s birth, their social insurance number, the dates of entry and withdrawal and the number of his personal account,

(g) To keep a personal account for each member in which the Management Committee shall record the full name and the identity card number of the member. The personal account should be credited with the contributions collected from the member and from his employer, the interest and any other amount made for or on behalf of, payments made at the end of each year and the total amount standing to his credit at the end of the year, and

(h) To keep proper accounting books which will give precise picture of the actions and transactions and evidence of collections and payments of the Fund.

Submitting of accounts and of other documents to the Registrar

16. Within nine months from the end of each financial year the Management Committee must submit to the Registrar the following:

(a) a copy of the Fund’s Income and Expenditure Account for that year,

(b) a copy of the Fund’s Balance Sheet at the end of the year,

(c) a copy of the Auditor’s Report and

(d) a statement showing the number of new members during the year, the number of members who ceased to be members, the total number of members at the end of the year, the number of members from whom contributions were collected and the number of members to whom benefits were paid during the year.

17. Failure to submit the accounts of the Fund within the prescribed period constitutes an offence and a fine is given that cannot exceed the amount of £750.

Auditing of accounts

18. The books and accounts of the Fund should be audited by an auditor appointed by the Management Committee unless is otherwise provided for in the Rules/Regulations of association.

19. The auditor has the right to inspect all books, documents and accounts of the Fund and request from any member of the Management Committee or any other officer of the Fund, to provide information or explanations that he may deem necessary for the exercise of his duties.

20. The auditor prepares and submits to the Management Committee, within a reasonable time, his report which is published by the Committee together with the accounts of the Fund. Every member of the Fund is supplied with a statement of his account.

21. For the purposes of the legislation, an auditor means a person having the qualifications for appointment as an auditor of a company according to the provisions of Article 155 of the Companies Law, Chapter 113. The Registrar, however, after taking into consideration, the number of the members of the Fund, the amount of contributions and the assets of the Fund may approve the appointment as an auditor of any suitable person that does not have the above qualifications.

Contributions to the Provident Funds.

22. The Provident Fund Law does not specify the rate of contribution that should be paid to the Provident Fund.

23. The percentage of contribution and whether the calculation will be based on the whole or part of the wage/salary, are agreed upon by the employer and his employees. The percentages can be changed from time to time and vary from one provident fund to another.

24. Every employer should pay to the Fund any amount received or deducted by him as a contribution of a member to this Fund as well as the contribution paid by him in respect of the period of time for which he received or deducted a contribution of a member.

25. The time limit for transferring the contributions to the Fund is 30 days from the date the contributions were received or deducted by the employer.

26. For every payment of contributions the employer submits to the Committee a contribution-statement showing the full name and the identity card number of the member for whom contributions were paid as well as the amount and the period for which these contributions refer to.

Criminal Prosecutions

27. Legal proceedings may be taken in cases where an employer fails to pay the above contributions in the time period prescribed.

28. In the case of conviction of the employer due to his failure to pay the collected contributions to the Fund, the court compels him to pay the owed contributions that are received as a fine. Also the court may issue a fine of up to the amount of £750.

29. In the case of conviction of the employer due to his failure to pay the collected contributions, the employee or the management committee has the right to present evidence concerning periods that the employer failed to pay the contributions other than the periods mentioned on the prosecution that refer to the same employees, provided that the employer was previously notified about the testimony. If the court finds the testimony satisfying, then it compels the employer to pay the owned contributions.


30. The benefits from the Provident Fund can only be paid to any member of such fund or to the legitimate heirs of the member. These benefits are prescribed by the Rules/Regualtions of association but are restricted to those provided by the legislation:

(a) In case of retirement i.e. when the member exceeds the age determined in the Rules/Regulations of association,

(b) In case the member becomes permanently incapable for work,

(c) In case of the death of the member,

(d) In case of termination of employment of the member provided that in the case of a member of a provident fund which operates for the employed persons of more than one employer, the termination of employment of such member shall not give the right to benefits under paragraph (d), if within six months from the termination of employment the member is employed by one of the said employers,

(e) In case of dissolution of the fund.

31. The assignment or charge of a benefit is forbidden under the Provident Fund Legislation.

Investments and loans

32. The reserve funds of each provident fund are invested by the Management Committee on behalf of the fund in accordance with the principles and general instructions issued from time to time by the Minister of Finance following consultations with the Labour Advisory Board.

33. It shall be prohibited to invest any money belonging to a Provident Fund in a business of the employer or to deposit such money in a current account or a fixed deposit account of the employer, unless the Provident Fund is operating for a bank or a co-operative credit society.

34. The investments of the Provident Fund shall be kept free from any mortgage.

35. No loan under any form shall be granted from a Provident Fund, to any auditor or employer contributing to the Fund.

36. The Rules/Regulations of association of a Provident Fund may provide for the granting of a loan to a member under the following terms and conditions:

(a) The purpose of the loan is for the erection or improvement of the house of a member or his child, for the education of the member or his child or for the medical expenses in case of a serious illness of the member or of a member of his family.

(b) The amount of the loan shall be determined after taking into consideration the age of the member and his ability to repay the loan.

(c) The Management Committee will have satisfactory guarantees.

(d) The loan shall be payable within a period not exceeding twenty years and

(e) The interest rate shall not be lower than the interest rate paid by Banks for fixed deposit accounts.

Inspections and Investigations

37. The Registrar may carry out investigations concerning the affairs of any Provident Fund:

(a) If the majority of the members of the management committee apply for or the members representing the employer, or the members representing the members of the fund or at least 1/3 of the members of such fund, provided that at all cases the application is supported by facts and evidence satisfying the Registrar that there is a reasonable cause for the carrying out of an investigation.

(b) The registrar shall have the power to carry out an investigation or inspection on the activities and affairs of any provident fund, if it appears to him that, provisions of the Rules/Regulations or the provisions of the law are not complied with.

38. The investigation can be carried out by any inspector appointed according to the Social Insurance Legislation or by any other officer of the Ministry of Labour and Social Insurance authorized for this purpose by the Registrar.

39. The members and the officers of the Provident Fund, for which the investigation is carried out, have the obligation to help and assist the Registrar to carry out his duties.

Liquidation of a Dissolved Provident Fund

40. Any Provident Fund, when dissolved shall be under liquidation by right and until the completion of liquidation and for the purposes of this liquidation shall be deemed to be in existence.

41. The liquidation shall be carried out by the Management Committee unless otherwise provided in the Rules/ Regulations of association and in the absence of such committee one or more receivers are appointed by the Industrial Disputes Court.

42. The receiver shall manage the Provident Fund and his power shall be limited to the needs of the liquidation. The receiver shall be responsible for the payment of compensation if due to his own fault he breaches his duties.


43. In the case where an interested party is not satisfied with the decision of the Registrar, he may appeal against it to the Industrial Disputes Court within 30 days after he is being notified of such decision or he may appeal to the Superior Court.

44. The disputes between the provident funds and their members are under the exclusive power of the Industrial Disputes Court.


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