Political slogans about “social justice” and “nobody getting left behind” once soun- ded good but now sound very hollow, with an official figure of one in four Maltese (mainly pensioners) at risk of poverty. The currently fashionable catchphrase is “good governance” – does this also apply to pensions? Certainly not in the last three decades.
The feature on plans to introduce workplace pensions (April 3) quotes the Malta Employers’ Association as disagreeing with such schemes. Their interest is obviously not whether their workers might end up at risk of poverty in old age. Workplace pensions (also known as second pillar or service pensions) are a feature of mature, organised countries and not of banana republics.
Until recently, there were no mandatory workplace pensions in the UK private sector, although the best private companies always had their workplace pensions to attract and keep talent. Now the UK has passed legislation for all private sector employers to establish mandatory workplace pensions for all employees. The UK public sector has had mandatory workplace pensions for a very long time.
Why quote UK pensions? Through colonisation, most of the administrative infrastructure of our institutions has been based on the UK’s, and the Maltese public service did in fact have a workplace pension (tat-Tesor) until 1979. In those ‘revolutionary’ 1970s, ruling Maltese politicians decided that there should no longer be workplace pensions but only one, single, new, mandatory contributory pension system referred to as the two-thirds (NI social security tal-Bolla) pension.
They also decided and legislated that future pensioners who had both a workplace pension and a two-thirds (first pillar) pension would have to suffer deductions from their two-thirds pension. The reason given for these deductions from a mandatory contributory pension was ‘social justice’, and all the big unions seemed happy with this new version of social justice as none made any noticeable fuss.
During the short Alfred Sant premiership, the ex-RAF pensioners briefly convinced Sant that they were the only service pensioners to suffer the injustice of having their mandatory contributory pension deducted because of their UK workplace pension, presumably until the OPM’s civil servants reminded the PM that there were thousands more service pensioners suffering the same punitive Malta social security legislation. Plans to resolve the service pension problem for just the ex-RAF pensioners were ditched.
They quote good governance when and where it suits them
The Lawrence Gonzi administration conceded in Parliament in 2008 that deductions of workplace/second pillar pensions from the two-thirds/first pillar pension was an injustice which needed resolution, but recommended only a very small and unsatisfactory solution.
In their 2008 electoral manifesto, the Nationalist Party promised to satisfactorily resolve the service pension problem for all involved but, in fact, did nothing about it until their 2013 electoral manifesto, when this time they produced actual figures of how this 30-year-old problem could start being seriously tackled.
The ex-RAF pensioners tried the same ‘trick’ with Opposition leader Joseph Muscat, who promised them a solution to their service pension problem, until we reminded Muscat that the same problem affected thousands of other pensioners. The Labour Party 2013 electoral manifesto then promised nothing on pensions apart from a review.
In the meantime, two of our members, one an ex-British civil servant and the other an ex-UK NHS consultant, filed petitions with the European Parliament, complaining about the way the Malta government was deducting their mandatory contributory Malta pension because of their UK public service workplace pension.
The EU Commission eventually issued an infringement procedure against the Malta government, arguing that deducting a UK-based workplace pension from the Malta social security pension was illegal.
In the meantime, both Nationalist and Labour administrations continued to oppose the EU Commission, meaning that both parties have been unwilling to resolve the consequences of this institutionalised pension fraud they created in 1979.
Although the European Court of Justice dismissed the EU Commission’s case on a technicality, the Court concluded that this case against the government of Malta is still admissible.
When the previous, Nationalist administration favoured the introduction of a new mandatory workplace/second pillar pension system, the Pension Working Group reminded them that the problems created by termination of the previous one in 1979 had not yet been resolved.
The politicians’ response has been to legislate the exemption of a new second pillar from the legislation imposed on other second pillar pensions, or to recommend third pillar pensions. Third pillar pensions would not be subject to deduction from the first pillar pension on the Maltese government’s legal excuse that the employer had not contributed.
What a shameful state of affairs for successive government administrations to contrive elaborate legislation to continue resisting repaying defrauded pensions. They quote good governance when and where it suits them.
One might argue that our courts and lawyers also lack credibility. Our court concluded against the police service pensioners’ claim, arguing that Malta’s pension system is a “social solidarity” between the employed and pensioners, with government sort of having a right to distribute this ‘solidarity’ as it sees fit. Lawyers and judges seemed unaware that our mandatory first pillar is a contract between the State and the worker, with social security law stating that the worker, employer and the State must all contribute one-third to the pension contract.
Is breaking this contract legal?
Albert Cilia-Vincenti is president of the National Association of Service Pensioners.