Political leaders say MPs' pensions should be part of reform

Both the Prime Minister and the Leader of the Opposition feel that the pensions of the political class should not remain untouched, even if the terms of reference of the Pensions' Reform White Paper exclude these pensions altogether.

Unless the Maltese pension system is reformed, the White Paper says, the system will not guarantee a decent livelihood for future pensioners.

But while the population is being told that the concept of "self help" needs to be introduced because the state will only be able to provide a minimum "safety net" pension and that people can no longer take comfort in a national insurance contribution that guarantees them an adequate livelihood, the White Paper's terms of reference exclude pensions enjoyed by the President, ministers, parliamentary secretaries and MPs - the only citizens who get an uncapped pension.

"No social categories should be excluded from the pensions' reform," Prime Minister Lawrence Gonzi told The Times.

He said MPs and ministers' pensions should be up for discussion. "A second tier pension will also have to be guaranteed for MPs," Dr Gonzi said, explaining that the White Paper had not delved into ad hoc occupational pensions, such as service pensions, the pensions of members of the Armed Forces of Malta and of civil servants who joined the government before 1979, as these were considered second tier pensions.

Labour leader Alfred Sant said that, as he had told former Prime Minister Eddie Fenech Adami in December 2003 during the budget debate, he does not think there should be anything out of line or different for parliamentarians. He said he had no objection to this issue being debated holistically "in a forum which forms part of the national discussion".

Government whip Mario Galea too said MPs' pensions should be up for discussion adding that one "should look at the conditions members of Parliament work in".

Mr Galea said that in terms of remuneration, Maltese MPs were underpaid when compared to other European MPs. He said support services such as offices were also lacking for Maltese MPs.

Opposition whip Joe Mizzi said his party was not in favour of a reform of pensions, as had already been declared officially. He said parliamentarians' and ministers' wages were inadequate when one considered their responsibilities.

"Politicians dedicate most of their time to their office, to the detriment of their families and their health sometimes," he said.

Former Prime Minister Karmenu Mifsud Bonnici agreed that politicians should not receive a privileged pension. "The same criteria should apply to everyone. There should be no discrimination with regard to pensions of MPs or service pensions. On the other hand, people should not receive two pensions. We should take the most favourable one and that's it."

In general, pensions are worked out on a formula based on the best three consecutive years of the last 10 years of an employee's working life. In the case of the self-employed, an average is worked out on the net income of the last 10 years of employment.

Pensions amount to two thirds of this average, which is capped at Lm6,750 following amendments to the National Insurance Act in 1979. Data shows that the majority of pensioners earn a pension of Lm1,500 to Lm3,000. About 21 per cent of pensioners get between Lm1,500 and Lm2,000 a year, slightly more than a quarter of pensioners earn between Lm2,001 and Lm2,500 annually and 16.5 per cent earn between Lm2,501 and Lm3,000.

Members of Parliament enjoy the full two-thirds of their salary in their pension which is also increased according to the actual salaries of holders of a political office.

This means that, for example, Dom Mintoff, as a former Prime Minister enjoys a pension of over Lm11,000, based on Dr Gonzi's current salary, which stands at Lm16,789.

Even President Fenech Adami, as a former Prime Minister, is enjoying such a pension, coupled with his present salary, which is more than Lm18,000.

A quick calculation based on the Financial Estimates 2005 shows that Dr Fenech Adami is entitled to Lm29,000 in salary and pension a year.

When he leaves the Palace, he will be carrying with him the full two-thirds of his presidential salary - Lm12,000. This is about Lm8,000. His pension will rise with every revision of his successors' future salaries.

Ministers and parliamentary secretaries also have their uncapped pensions assured, based on their salaries which at present stand between Lm14,000 and Lm14,800.

In 2001, the government approved a 23 per cent increase in salaries and pensions for ministers, parliamentary secretaries and MPs. Ministers and parliamentary secretaries have since raised their salaries by more than Lm1,000.