Raise national insurance to fund full pensions

By and large, pensions in Malta are related to the amount of national insurance (NI) contributions paid out by the pensioner during the course of his or her working life. This is certainly the case for people who joined the workforce after January 15, 1979.

A number of pensioned former civil servants who joined before this date receive a non-contributory service pension and a greatly reduced NI contributory pension.

In particular, in the case of civil servants who had paid maximum NI contribution, the reduction is about 63 per cent of what they ought to receive as NI pension.

In other words, they are only getting 37 per cent of what was promised to them at the start of their career with the government: a full NI pension.

A remedy to this injustice is long overdue. However, a correction over a number of years is possible.

Indeed, by increasing the NI contribution of all workers by 0.5 per cent per annum from the employee and another 0.5 per cent from the employer for five years, the government can raise enough money to remove this anomaly.

This is achieved by concurrently raising the pension of these people by 11 per cent per annum until a full NI pension is reached.

On balance, government’s tax revenue would increase, since it would be receiving additional tax at 25 per cent and 35 per cent from these individuals.