The service pension saga

I wish to refer to the comments raised by the Pension Working Group (PWG) about the changes to the definition of service pension in the Social Security Act and its economic aspect. Pages 103 and 104 of the report refer.

The original definition of a service pension in terms of law was: “A service pension with effect from April 1, 1978, means a pension or other allowance awarded to a person in respect of past services in Malta or abroad and shall in each and every case be considered on an uncommuted basis…”.

It is, therefore, amply clear that the legislator had only one intention, namely, that of treating all pensioners who, on retirement, are entitled to a service/occupational pension equally.

Unfortunately, the amendments carried out by different administrations between 1986 and 1997 to redefine a “service pension” proved to be disastrous, discriminatory in all aspects and unnecessarily divided pensioners into first- and second-class citizens. It is a fact that the changes introduced proved to be a blessing for a category of pensioners and unjust to thousands of other pensioners.

An honourable solution to this state of affairs needed to be found as early as possible before the coming general election.

I am sure that pensioners entitled to a service pension welcomed the PWG decision to draw the attention of this Administration to the fact that the pension reform pointed to the need for citizens to partake in the second and third pillar pensions in order to enhance the adequacy of the retirement income. It further stated that this contrasts with the current situation where service pensions are being considered in the calculation of a social security, two-thirds pension.

Finally, the PWG highlighted “that the issue of service pension cannot be viewed by simply considering one category of service pensioners. To do so would place the government in a position where claims of discrimination by other categories of pensioners would be hard to defend”.

In this scenario, it is evident that both the Nationalist and Labour administrations have contributed towards the present crisis on service pension and its application in line with the Social Security Act.

Currently, Malta is dealing with an infrigment case on service pension with the European Commission. This case may be referred to the European Court of Justice for a decision and this will take a considerable time to be settled.

In the circumstance, I would like to appeal to all members of Parliament to set up a working group together with the Pensioners’ Association and other interested stakeholders to address the problem both from the economic point of view and also from the social aspect to find ways and means to end this 32-year saga for the benefit of all concerned.