The Labour Party does not agree with raising the retirement age although it supports the introduction of a second pillar pension funded by employers and employees.
Labour economy spokesman Charles Mangion,speaking at a press conference at party headquarters in Ħamrun, criticised the government for agreeing with an EU proposal to link the retirement age with life expectancy, which effectively means raising the age by when people can start to receive a pension.
The government has denied it has plans to change the pensionable age, which was last raised to 65 in 2005.
“No decision has been taken to raise the retirement age and there was no agreement this should be the case,” the government said.
The 2005 reforms were meant to serve until 2027, Dr Mangion said. “Rather than increasing the retirement age, the government should now be focusing on increasing the participation rate in the labour market and so ensuring pensions are sustainable by having more social security contributions,” he said.
The primary aim, he added, should be to strengthen the first pillar pension, which was the government pension based on the social security contributions.
The PL is proposing that part of the national insurance contribution be hived off into a dedicated pension fund and workers will receive a yearly statement showing them what money they have invested in the fund and what to expect as a return.
Dr Mangion said Labour agreed that a mandatory second pillar pension scheme – where workers and their employers contribute to a private pension – should be introduced but only when economic conditions allowed, so as not to undermine industrial competitiveness and the people’s purchasing power. The party also agreed on voluntary, third pillar pensions – voluntary contributions to private pension schemes. These, he said, should be encouraged through fiscal incentives.
Dr Mangion revealed that Labour was for the first time participating in consultations with the Pensions Reform Working Group, which is conducting the statutory review, five years after the pensions law was enacted.
“It is surprising how the government committed itself to the EU on linking the retirement age with life expectancy while this review is still in progress,” Dr Mangion said.
The government defended the pension reform undertaken in 2005, which, at the time, was criticised by the PL.
“Countries which did not take action regarding their pension systems had to raise the retirement age at one go, increase taxes and reduce social benefits. Had the government done as the opposition wanted, Malta would have ended up in a situation similar to Greece, Spain and Portugal,” the government said.
In January, Finance Minister Tonio Fenech said the government had no intention of introducing mandatory second pillar pensions this year but would seek consensus over the issue.