The government should encourage people to have children and integrate migrants in a bid to make the pension system sustainable, according to the General Workers’ Union.

While Malta’s birth rate is decreasing again, some European countries had opted to grant hard cash to encourage couples to have children. Raising children was not cheap and the government should explore different ways to encourage population growth to ensure a healthy worker-to-pensioner ratio, the union said.

Meanwhile, the government should also explore a sustainable and serious integration of migrants, especially those contributing to the black economy.

These recommendations form part of the GWU’s reaction to the government’s proposals on the pension reform.

The union largely welcomed the government’s proposals. It was particularly satisfied that the rate of social security contributions would not be increased and that the retirement age would not be raised.

The government would be facing a higher pension bill

The GWU expressed reservations about the age requirement, 76 years and over, with regard to the gradual introduction of the Guaranteed National Minimum Pension to pensioners who are at risk of poverty, saying there should be no distinction between such pensioners.

It pointed out that the government was rightly encouraging more women to join the labour market, leading to an increase in government revenue from income tax and social security contributions.

However, this also meant that, in the future, the government would be facing a higher pension bill.

Its position paper laid down several suggestions, with the union insisting that the revenue from social security contributions be administered separately as used to be done in the past, rather than being placed in the general consolidated fund.

Another GWU suggestion is for the cost-of-living adjustments to be calculated in full when pension revisions are made, instead of being granted at two thirds.

This would do away with the current anomaly where pensioners who retired before 2008 had a higher income than those who retired in the following years.

It also said that, without increasing social security contributions, the maximum pensions for those born before 1962 should be adjusted to become more relevant to current needs. This pension’s limit has been frozen for years, the union noted.