Our pension system is based on the traditional family model – an uninterrupted working career – reflecting past norms where the breadwinner was the husband and the wife responsible for the family. This resulted in a gender discriminate system. Why?
To qualify for a contributory pension one must have at least 12 years’ paid contributions. If a person works less than 12 years s/he does not qualify. This explains why older women are unlikely to have their own pension – they either were never in the labour market or permanently exited it when they had their first child.
To qualify for a full pension you must have the full 40-year contributory period. In our culture it is, often, the wife who interrupts her career to raise children. Family-friendly measures allow women to stay in employment on reduced hours or part-time, and to remain in employment through the free childcare service introduced by this government.
Such women will obtain a lower pension as they pay a lower contribution than they would have paid if they worked full time. The average contributory history for a woman is 27 years – entitling her to a pension that is only 67.5 per cent to that of a male. Women spend disproportionately more time on unpaid care work than men caring for elderly relatives.
This government has neutralised these discriminations. The child rearing credits introduced in 2007 allow a woman to make up for interruptions in her career due to child rearing which negatively affect her contributory history. Today a parent is entitled to a maximum of four years’ credit for each child up to three children; and a further two years’ credits for the fourth and any other child subject to re-entering the labour market for a similar period.
To further propel human capital development, further/higher education/lifelong learning credits were introduced. Women constitute the majority of persons following further/higher education and such credits help them meet the full contributory period.
Recognising the important contribution to the national well-being through their active contribution to the economy, a woman entitled to a pension in her own right will obtain the full and not five-sixth survivors’ pension on the death of her spouse. To protect current pensioners from being at-risk-of-poverty the minimum pension guarantee introduced in 2007 from which they were excluded is now extended to them as well – positively affecting women who live on average five years longer than men.
There is one other important gender discriminate aspect of our pension system that requires discussion and resolution.
The pension accrues, as a legal title, to an individual and it cannot be alienated from such a person. Thus in the ‘male breadwinner model’ this right rests with the male. The female spouse, unless entitled to a pension in her own right, only has a derived and inherited right to a survivor’s pension if the death occurs following retirement age affording her to five-sixth of the husband’s pension.
The question of derived rights is tested when a family dissolves due to separation or divorce. This necessitates a division of rights and entitlements, which in most jurisdictions implies a clean separation or divorce – including the pension.
This division of the pension income depends on the principles guiding the pension system. This issue does not occur with regard to voluntary pensions as in most jurisdictions these are treated as property: the position is that paid and unpaid work is of equal value in all cases, in that the households earning potential is attributable to efforts of both partners.
The issue becomes complex when one considers how the social security pension is treated in such circumstances. This results from the nature of the pension entitlement. In such systems pension income depends on a magnitude which is unknown at the time of dissolution – salaries change, contributions paid change, and the maximum pensionable income also changes over time.
Jurisdictions adopt one of three approaches: no specific pension rules for divorcees; some form of sharing or splitting of pension entitlements at the time of divorce; and award of specific benefits to the divorced spouse.
Malta is in the first category. The treatment of a pension when the dissolution of a household occurs is a concern raised by our members and bodies representing women. Nisa Laburisti pledges that as an organisation it will take this issue to the next level by proposing that the Labour Party takes on board its proposal and include in its upcoming electoral manifesto the setting up of a committee of experts resulting in the publication of a white paper for national consultation on this last bastion of pension gender discrimination.
Claudette Abela Baldacchino is president of Għaqda Nisa Laburisti.