Bill settles pension problems of former civil servants in parastatal entities

The House of Representatives has given a second reading to a bill determining the pensionable entitlement of public officers who have moved to parastatal organisations.

The bill also provides for a pension to members of parliament under 61 who, owing to infirmity, cannot continue in office or take up a gainful occupation.

The bill was piloted by Finance Minister John Dalli, who explained that over the years the government had delegated several of its functions to autonomous entities.

Many civil servants had been employed with new authorities and had to resign from the civil service. Several others had been seconded and others still had been detailed to the new jobs.

The way their pensions is calculated had never been clearly stipulated and a number of interpretations of how this could be done had been given.

Discussions with the trade unions had taken place in order to iron out the problem.

Mr Dalli recalled changes in the pensions system in 1979 and said that as a result those employed with the government after that date were no longer entitled to a service pension.

All those employed by the government before January 15, 1979 and had somehow found themselves in the parastatal entities remained entitled to a service pension through specific legislation such as in the case of Enemalta, the Malta Government Tourist Board, the Broadcasting Authority and the university.

In other cases, a Presidential Order was issued declaring that service given by government workers in parastatal entities would be considered as a service given to the government for pension purposes. This applied to, among others, MIA, the Junior College, and the MFSC.

In other cases the pension rights were safeguarded by the legislation which set up the parastatal entities.

In all cases, with a few exceptions, such as the MTA, no precise description was made on how pensions would be calculated for pensions purposes, such as whether it would be the last salary before retirement or the last salary from the civil service.

This bill was the result of extensive talks with the trade unions.

Public entities were being divided into two categories. The first included those at which the calculation of pension had not been not specified by law. The second, included such entities as the Malta Tourism Authority for which the calculation had been specified.

When a civil servant took permanent employment with a company, corporation or entity before April 1, 2002 or was detailed for service before April 1, 2002 and retired or took up permanent employment with such entity, the pensionable emoluments on retirement would be the emoluments actually paid to such officer at the time of his retirement so long as they were not higher than those payable to an officer in grade three of the civil service.

The companies included the University, the Malta Government Tourist Board, Enemalta, the Malta Broadcasting Authority, Malta International Airport plc, Public Broadcasting Services, Malta Financial Services Centre, the Junior College, the Water Services Corporation, Maltapost plc, Posta Ltd, the Planning Authority, the Public Transport Authority, the Malta Maritime Authority, Telemalta Corporation, Maltacom plc, and the National Audit Office.

Mr Dalli stated that detailed employees would have a period of time to decide whether or not to terminate their employment with the government. Those not in permanent employment with the entity would be offered the choice to become employees of the entity. Those wishing to be employed with the entity, would have their pension calculated according to their final salary so long as the capping of grade three was not exceeded. Those remaining employed with the government would have their pension calculated on the substantive grade they were in when seconded from the civil service.

Mr Dalli said those who had already retired would have their pension reviewed in terms of this bill, but no one would receive a lower pension than at present.

In the case of workers who retired from now on, their pension would be worked out on the basis of their salary at the time of retirement pegged to the government salary scales and capped to grade three of the civil service. The capping was being made to guard against excessively large salaries in the parastatal entities.

Mr Dalli said the bill also covered the pensions of public officers on a performance contract.

Where a public officer, being either a cabinet secretary, a permanent secretary or having a headship position under a performance agreement, retired from the public service after having served for a term of three years in such an office, the pensionable emoluments of such officer on retirement would be those attached to the salary scale, at the date of the officer's retirement, or the higher of the offices held by such officer at any time before his retirement.

The bill also proposed an amendment of the Members of Parliament Pensions Act.

Explaining the provisions involving members of parliament, Mr Dalli said that before the minister of finance approved the granting of a pension to an MP before the age of 61, he had to hold consultations with a medical board appointed for the purpose.

Opposition finance spokesman Leo Brincat (MLP) recalled that the issue of pensions for workers who moved to parastatal organisations was also the subject of talks held under the Labour government and talks were also started with the trade unions.

Mr Brincat asked why MITTS and the Restoration Centre were not included in the bill. He asked how many workers would be affected by this bill and what the costs would be.

Turning to the provisions on officers under a performance contract, Mr Brincat said such were political appointees and this bill would serve as an icing on their cake. The opposition did not agree with this part of the bill, not least because it did not include everyone.

Mr Brincat said the amendment regarding MPs appeared to affect two former members of the House who could not be gainfully occupied due to mental or physical disability. Unfortunately, as drafted, the bill allowed too much discretionary powers in this case as well. The minister could technically award a pension to one former MP and not the other, although he was not saying this would happen. Would this part of the bill be retroactive?

Mr Brincat said the definition of disability was not clear. A person who was blind, for example, could still attend sittings. Would the role of the medical board be only consultative?

Mr Brincat regretted that the government was not tackling the problem of the pensions of former servicemen with the British services.

Mr Michael Bonnici (PN) observed that some had suffered from administrative mistakes in the calculation of their pension. He appealed to the minister to consider pending requests from those employed with entities who had lost their original right to a pension although they had worked for several years with the government, notably in the Posts Department and the university. Among these workers were those who had been transferred to such entities from the government without their transfer having been signed by a minister. The case of these workers had also been referred to the Ombudsman and the Management Personnel Office.

Winding up, Mr Dalli said he understood Mr Bonnici's request. When administrative mistakes were made, administrative corrections could also be made. The problem, however, was that of eligibility in terms of the law. All those who were employed by the government and had had a right to a pension had not lost that right upon transfer to a parastatal company. This bill, however, covered problems such as when former government employees transferred to one parastatal company to another and another. This bill provided peace of mind on the continuity of the pension entitlement for such people.

Mr Dalli said this bill had involved extensive research on the workers who could be entitled to a pension. With regard to MITTS and the Centre of Restoration, they were all on loan from the civil service and thus received a regular government pension.

This bill, he said, involved a few hundred workers who would receive arrears because their pension had not been worked out properly. A few thousand liri was involved, although the amount was not too large. All government companies were included and the bill also provided for any new companies which may be set up. At last Malta would have a single system to determine the pension entitlement of everyone in the parastatal sector who would have transferred from the public sector.

Mr Dalli said the bill provided that in cases such as when Telemalta became Maltacom without specific legislation, the finance minister may issue a notice in the Government Gazette to guarantee the pensions of the former government employees.

Mr Dalli said the role of the medical board would be only to declare if the persons involved could work.

Referring to Mr Brincat's remarks on political appointees, Mr Dalli said promotions were made after rigorous interviewing. At the finance ministry, for example, promotions had benefited workers of all political beliefs. Those loyal to the country should be given every chance to work in similar posts.