On June 22 the Institute of Financial Services held a seminar on the local pension system. The Alliance of Pensioners’ Organisations, which represents about 85,000 pensioners, was not invited to participate along with other guests at this very important event.
In spite of this unwarranted treatment by the institute, the alliance feels that in the interest of current pensioners it is appropriate to comment on two points that were discussed in the seminar.
It is true that with effect from January 1, 2016 the government introduced a new minimum pension scheme. In order to address the problem of poverty risk, it was established that the minimum income should not be less than 60 per cent of the median income.
Currently the median income is €12,786 per year. In the case of a single person the equivalent income is €7,672 per annum or €147 per week. On the other hand, in the case of a married couple it goes up to €11,508 per annum or €221 per week.
The reality about the above measures clearly indicates that in the case of a single person the formula worked perfectly as the weekly income now is €147 per week. On the other hand, in the case of elderly married couple, a two-person household with one pension, the income went up only to €160 per week, much less than the €221 euro mentioned above.
Whatever action is taken it is everybody’s duty to guarantee that the first pillar pension remains sustainable and adequate
Due to the changes it resulted that a single person had an increase of €11.61 a week and a man maintaining a wife received an increase of only €3.80 per week.
At the seminar, the Prime Minister said that “12,000 of the most vulnerable pensioners received a better income, and the recent Caritas report proved that those on this minimum pension could keep up with decent living”.
The alliance hopes that Caritas does not approve the above-mentioned social injustice between pensioners because, after all, a couple with an income of €160 per week is still at the risk of poverty and social exclusion.
The Prime Minister also said that “workers should be liable to depend on the State pension to have a decent income”.
The alliance always supported this view and insisted that the first pillar State pension should be the flagship of our pension system. So there is common ground between the two sides and can work together to find solutions on this important issue.
It is a fact that workers need to contribute to be part of a second or third pillar pension scheme in order to supplement their income on attaining pension age. It is also a fact that thousands of workers do not have enough financial resources to be part of these pillars.
In this scenario the alliance sees whether it is possible that discussions be carried out on the possibility to revert to the old system by the reintroduction of a fund and the ring-fencing of benefits.
Naturally this proposal is only valid if, from studies carried out, it is proved that the measures and changes applicable will be a breakthrough in the long term for the sustainability and adequacy of the first pillar pension.
Whatever action is taken it is everybody’s duty to guarantee that the first pillar pension remains sustainable and adequate not only to current pensioners but also to the next generations.
Carmel Mallia is president of the Alliance of Pensioners’ Organisation.