One in four of the population is said to be poor or at risk of poverty – these are predominantly pensioners and single mothers. When these statistics were first published some years ago, many doubted the figures. The previous administration referred to these poverty claims as a “perception” promoted by the negativism of those trying to talk down the economy.

Caritas had therefore to go back to do more homework, and their recent research indicates that a couple with two children needs at least an annual income of €11,000 to €12,000 to have a reasonable quality of life just outside poverty. Furthermore, the latest Caritas report exposes the rapidly widening gap between price inflation of basic requirements and wage or pension increases.

The Caritias figure of €11,000 to €12,000 annual income for basic, no-frills requirements of a small family is very close to the just over €12,000 of the current maximum pension. Perhaps not everybody realises that however high one’s wage and bonuses are (or were), the current maximum pension is something over €12,000, and no more – that is, just outside risk of poverty zone.

If savings haven’t been made throughout a working life, a retired couple living on one maximum pension means looking down at the brink of poverty. And now their savings in banks generate practically no interest.

A booming economy and hardly any unemployment, in spite of a flood of East European migrants is, of course, “the envy of the world”, but who exactly is enjoying this boom? The present Maltese property price inflation is pushing up the overall cost of living, and which is not reflected in any significant wage or pension increases.

If that weren’t enough financial pressure on pensioners, their pension is further reduced by taxation. Malta is becoming a Mediterranean paradise for the rich – free health, non-means-tested free tertiary education with stipends, low income tax and no annual tax on property values. Without the rich we are all poor, but economic success needs to trickle down in various ways to those at the bottom of the pile – otherwise there’ll be trouble ahead.

Both main political parties talk a lot about pensioners and poverty, but what have they really done about it? The Opposition lambasts the government about the Caritas report findings but have no convincing plans of how they would reverse this rapidly increasing gap between the haves and have-nots.

Neither did a quarter century of Nationalist administration resolve the service pension open sore in spite of electoral programme promises to do so. They did officially recognise the injustice in Parliament in 2008, but did very little to satisfactorily cure this cancer.

Service pensioners have one pension deducted from another so that, one can argue, their stolen pension contributes to the non-means-tested welfare state of the comfortably off

Their 2013 electoral manifesto claimed that the cure was overdue and needed implementation. Costings were published. Does the new PN leader agree with them? Or are they only going to continue sarcastically blaming it all on Dom Mintoff?

The present Labour administration has done very little about pensions apart from small increases at the very bottom and permitting some fiscal incentive for workers to invest in private third pillar pensions. Whether private pensions are actually good advice seems dubious.

Private pension companies invest mainly in bonds and other interest-bearing instruments, but if the zero or negative interest rates devised by central banks around the world are to continue in the long term, private pension companies may go bust and leave investors with nothing.

Photo: Darrin Zammit Lupi

Coming back to the almost 40-year-old service pension cancer, this arose when in 1979 the Malta government, in its wisdom, made service/work-place/second pillar pensions illegal.

The reasoning seemed to be that all workers should only have one pension – the erroneously called ‘two-thirds’ pension. Erroneous because the maximum pension currently obtainable is two-thirds of something over €20,000 and not of best salary in the last ten years.

After 1979, workers with a service pension had to suffer deductions of the mandatory contributory two-thirds pension because of their service pension (both pensions having been part of their work contract). Their total amount of pension had to be brought down in line with that of those who only had the two-thirds pension. This was the beginning of one of Malta’s worst administrative scandals – institutionalised pension fraud – as confirmed more recently by the EU Commission.

Two Labour prime ministers, Alfred Sant and Joseph Muscat, said they would resolve this service pension injustice, mistakenly assuming this involved only a few hundred ex-RAF workers, and not thousands of ex-Maltese and ex-British public and military service employees. When they discovered that, they changed their mind, and even fought (as did the PN administration), at EU level, against the interests of these pensioners.

The injustice against these service pensioners is even greater when one considers that they are means-tested to decide how much of their two-thirds mandatory contributory two-thirds pension will be deducted, depending on the size of their service pension.

Other well-off pensioners (with high incomes from other sources) are not means-tested for deductions of their two-thirds pension. The reasoning that some pensioners should not have more income than others, therefore applies only to service pensioners and not to all pensioners.

It also means that service pensioners have one pension deducted from another so that, one can argue, their stolen pension contributes to the non-means-tested welfare state of the comfortably-off. This warped philosophy is at the heart of Malta’s (hypocritical) social solidarity political slogan.

Some service pensioners have taken their case to the local courts. Believe it or not, learned judges have actually declared that the two-thirds mandatory contributory pension is not an employment contractual right between the State and the worker, but a social solidary payment whose quantum is determined by the government of the day.

No wonder one might even dare harbour doubts about the independence and integrity of some of our courts’ judgements.

Albert Cilia-Vincenti is president of National Association of Service Pensioners.