Pensions 'must be adequate' alliance insists

Ensuring an adequate pension - one that reflected both inflation and wage increases - was a key factor in a reform of pensions, the Alliance of Pensioners' Associations said yesterday.

Speaking at a press conference, alliance chairman Albert J. Tabone said they had submitted proposals to the government about the proposed reform and one of the most crucial aspects was that the law had to be clear about what one understood by an adequate pension.

"For us, an adequate pension is one that allows a pensioner to remain active in the social and cultural life of the country, that allows one to remain an active consumer and which permits one to cover the expenses of health care one might need," Mr Tabone said.

"We are not saying that pensioners have to be able to continue to afford doing what they used to afford while earning a wage, but the income must be such as to allow one to remain active within society and afford the expenses that old-age life brings with it," he said.

Mr Tabone said pensioners have worked and contributed to the country's economy and entitlement to a pension was an act of justice, not of grace. But the irony was that with the way pensions were calculated, pensioners fared very badly with the passing of time as while salaries increased and everything went up in price, pensions did not increase in proportion to such rises, bringing pensioners close to the poverty line.

Citing a practical example, Mr Tabone said a person who used to have a salary of Lm10,000 would receive a pension of Lm4,638, which equated to about 45 per cent of the wage. In 10 years' time, however when the equivalent salary would be around Lm15,000, the pensioner would at best have seen his pension rise by around Lm500 from cost-of-living increases, to only around 33 per cent of the salary. That would put the person in the poverty range, he argued.

For pensions to be adequate they had be tied to inflation but there should also be a revision every five years to reflect increases in wages, he insisted.

The alliance said it was all in favour of a reform. Changes in the pension system should take place every couple of years so that big reforms would not be necessary over time.

The alliance also feels that rather than raising retirement age to 65, one could calculate it based on the number of contributions one has paid. Hence, someone who started working at the age of 16 would be able to retire by the age of 61. As things stood, contributions paid before the age of 18 did not count towards one's pension.

The alliance is also sceptical about the setting up of second pillar pensions because of the size of local industry. It would push up costs for employers and this could badly affect productivity.

The proposed pension reform was not very clear where widows' pensions were concerned. The alliance has asked the government to be clear about this issue, Mr Tabone said.

The alliance is made up of the Bank of Valletta Pensioners' Association, Ghaqda Nazzjonali tal-Pensjonanti, Ghaqda Pensjonanti GWU, Ghaqda Pulizija Pensjonanti, MUT retired teachers, Taqsima Pensjonanti MUMN and Taqsima Pensjonanti UHM.