In the twilight of the previous Nationalist administration, former prime minister Lawrence Gonzi used to say he was more worried about the inadequacy of the State pension than the sustainability of the pension system.
The subject seemed to fall by the wayside until yet another pensions strategy group was eventually set up, this time under the new government of Joseph Muscat, to go into the matter. The group had to publish its report last September, however, there is no sight of it yet.
In the run-up to the local council elections, Dr Muscat is raising the issue at practically every campaign meeting, arguing that now that the economy is doing so well, it is time to focus on the pensioners’ plight. This newspaper has been raising the problem for quite a long time as it is clear that the country’s wealth is not trickling down to all sectors of the population.
The subject was catapulted to the national agenda again only recently when figures released by the European Union showed that Malta has an abnormally high rate of elderly people at risk of poverty compared to the situation in other EU countries.
The way Dr Muscat is now repeatedly raising the need to tackle the inadequacy of the State pension suggests that his government is about to announce an improvement. Addressing a recent one-day conference organised by the Institute of Financial Services in collaboration with Times of Malta, Dr Muscat criticised the 2006 pensions reform that had paved the way for the raising of the retirement age to 65 years, saying it fell short of expectations.
He said: “It looked at future retirees and not at the present problem, as pensioners are nowadays facing poverty.” Dr Muscat was right: seeing to the needs of future retirees is important but ensuring that the current pension is adequate for the daily requirements of today’s pensioners is equally so.
According to EU figures, the number of people aged over 65 who are at the risk of poverty and social exclusion has shot up to 34 per cent, when the EU average is 26.5 per cent. The figure ought to make the administration act with greater speed in an effort to ease the burden shouldered by those hardest hit.
How does the government plan to finance an improvement in the State pension and, at the same time, ensure the sustainability of the system? Dr Muscat said his government would not raise the retirement age further and that it would not increase national insurance contribution either.
He said the government would solve the problem by getting more people to work. Raising the employment rate through the string of incentives it is offering will naturally help, but would this be enough to enable it to improve, on a long-term basis, the lot of pensioners at the risk of poverty?
If the government is so confident it has the key to the solution of the pension sustainability problem, it should immediately replace the national minimum pension with the guaranteed national minimum pension, already paid to widows and persons with a disability who were born on and after January 1, 1962.
This pension, equivalent to 60 per cent of the median income, should be made applicable to all pensioners. There should also be one maximum pension income, not two.
It is about time too that justice is done towards those entitled to a service pension, a problem that has been festering for 36 years.
Pensioners deserve having their plight seen to in an equitable manner.