Opposition’s main spokesman for economic development Charles Mangion said that the Bill offered the opportunity for better regulation leading to increased responsibility. The pension structure was part of a chain system, and problems were not to be considered in isolation. Forming part of this chain were the country’s economic and education systems.
First and foremost, he said, when tackling pensions one needed to look at the current economic situation. How could a sustainable pensions system be maintained? Why did Malta sell its assets in the past, failing to transfer earnings into a social administration fund? He argued that the current situation would have been different, had that taken place.
The regulatory powers and constant surveillance duties of the authority were better defined. It was given the faculty to appoint ad hoc inspectors for this scope – something that did not exist in other legislation.
Dr Mangion said the crux of the issue was one – avoiding pension operator negligence and ensuring a higher level of diligence.
Another issue was the lack of qualified personnel to work in this sector in Malta. The country was experiencing the need to further incentivise high net worth individuals to come to Malta and instil specialised persons in the sector, which lacked adequate manpower.
Apart from introducing foreign persons, it was important to continue strengthening the Maltese education system. Were students helping the country move towards better economic and social planning? The ageing population was increasing and the educational structure needed to further be prepared for this challenge. It was necessary to reduce the number of early school leavers and have more skilled workers – focusing on the qualitative, rather than quantitative.
The Bill not only facilitated schemes to operate from Malta, but the authority had the ability to act in a fast manner. The powers it possessed enabled people to have adequate, sustainable pensions.
It was crucial that these schemes were protected and well-administered. The last decade saw the introduction of many private pension schemes, some of which had failed. Foreign regulators were resorting to ring fencing measures to avoid situations such as the previous banking sector crisis.
The new regulations imposed strict obligations on fund and scheme operators and primarily the issue was their protection. Even more so, were the important sense of responsibility and the avoidance of vested interests. The Bill, he said, tackled this by taking into consideration the element of negligence from the operator’s part, even if unintentional. This sense of responsibility was wide and failure in this regard would make the individual personally responsible for the damages caused.
Speaking about pension sustainability, Dr Mangion said the government had launched the Pension Reform Report that is out for public consultation. The pay-as-you-go method was not a sustainable way to provide adequate pensions. In the light of this reality, he said, one needs to ask what the requirements were.
People were told that their earnings were not enough to lead to an adequate pension. Was the government moving away from its responsibilities to the detriment of the individual? A better savings system on the government’s part would lead to a better political economy. One also needed to keep people’s purchasing power and economic developments in mind. Was inflation eroding this? What was the impact of inflation and the hike in costs? How could one save money if one was already struggling with day-to-day living costs?
There was a need to look at the global picture because it was part of a chain situation. It was in the light of these realities that one needed to see what reforms were needed and what policies needed to be adopted. Other economic, administrative and financial elements, such as inflation had to be taken into consideration. This would result in a better social net, Dr Mangion said.