The Minister for Social Policy recently launched a retirement and financial capability group at a business breakfast. It has been described as an offshoot of the pensions reform drive. Its agenda is to raise awareness on money management and savings by targeting different groups.

The Alliance of Pensioners Organisations (APO) welcomes this measure and wishes all the best to the members forming this group, which should be instrumental in raising awareness and educating workers about their income security on retirement.

Current workers, especially young generations, will be aware of the fact that the income from the first pillar state pension alone is not enough for people to live in dignity after their retirement. They need supplementary income in order to make ends meet and therefore need to save and if possible have a supplementary pension plan.

The APO wishes to point out to the minister and to the group, however, that thousands of current pensioners were aware of this reality many years ago and planned accordingly for their retirement.

They saved money, even though the wages and salaries were very low, and opened bank accounts with interest rates of about five per cent; they were entitled to an occupation or service pension, and they also paid social security contributions to be eligible for a two-thirds pension.

Unfortunately, the reality today is different, as pensioners who planned properly for their retirement have been unjustly treated by the 1979 administration and politicians of both parties up to this very day. Their plans were destroyed, and their legitimate income dropped drastically over the years without a valid reason.

It is a fact that thousands of pensioners are still at risk of poverty while the chosen few enjoy high salaries and expensive lifestyles

For the record, it should be mentioned that pensioners entitled to a service pension are not entitled to a two-thirds pension but only to a flat-rate retirement pension at a very low rate. A married person maintaining a wife is entitled to a pension at the married rate. When his wife becomes entitled to a pension in her own right, the married rate paid to the husband is reduced to that of a single person.

The service pension is abated from the two-thirds pension entitlement.

The drop in the interest rate from five per cent to about 1.5 per cent and the 15 per cent withholding tax have all contributed to the decline in the financial standards of pensioners, leading them towards the risk of poverty in spite of the fact that they planned properly for their retirement.  

The APO agrees perfectly with one of the comments by guest speaker Lino Delia, who pointed out that “economic growth is essential to ensuring adequate pensions”. However, as APO was not invited to this important meeting, the remarks of the alliance are based on what was reported in this newspaper on January 26, 2017.

Delia knows very well that Malta is experiencing high economic growth and its unemployment figure is very low. It is very clear that the wealth generated did not trickle down to thousands of people, including the working poor, pensioners, workers in precarious work and other vulnerable groups. In spite of this economic boom, the adequacy of pensions was not addressed properly and the social dimension has been relegated completely.

Unfortunately, this mismanagement and bad governance by the administration was not raised in the meeting, probably because the members present had adequate or lucrative salaries and therefore were not interested in mentioning the grievances of thousands of poor people. 

It is a fact that thousands of pensioners still suffer the risk of poverty while the chosen few enjoy high salaries and expensive lifestyles.

 All pensioners received an increase of €1.75 per week. Persons with a low income also had an increase of €4 per week.

Can this amount be considered as adequate when compared to the prices asked for the purchase of food, medicine, goods and services? These soft measures are not enough to mitigate the regular erosion of the purchasing power of pensioners which is taking place at a very fast rate and leading to poverty and social exclusion.

 It is no surprise that the number of persons at risk of poverty and social inclusion is over 90,000.

It was reported that the Prime Minister said his pro-business government had delivered an “economic miracle” in Malta.

The APO congratulates the Prime Minister for this achievement.

However, in his road map, he should find space for a “social miracle” – that of providing adequate pensions.

Carmel Mallia is president of the Alliance of Pensioners Organisations.

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