The government is looking into the introduction of a national minimum pension to give retirees the chance of enjoying their last years, Social Solidarity Minister Michael Farrugia told Parliament yesterday.
The government was also evaluating how it could help those who had missing contributions, to ensure they could lead a better life.
Introducing the debate in second reading of the Bill amending the Social Security Act, Dr Farrugia said despite State pensions, a percentage of the population was still living at risk of poverty. Although this figure was below the EU average, there was room for it to be reduced. The government was carrying out exercises to improve the situation.
The Bill covers the third pillar pension for those who wish to contribute to private pension schemes to top up their State pension. There was a need for the culture of private pensions to become more common in Maltese society, he said.
There had already been significant work carried out by the Finance Ministry towards the introduction of the third pillar pension and for it to be linked to a number of incentives to be introduced in the coming weeks.
There was a need for the culture of private pensions to become more common in Maltese society
The changes being discussed would serve to give further definition to the existing law, while avoiding taxing further those who voluntarily opt for the third pillar pension, thus promoting a culture of saving.
Dr Farrugia said the computation of pensions would not be affected by opting for the third pillar. Also, the last budget referred to an allocation of €1.5 million towards incentives related to the third pillar pension.
These incentives were decided upon after discussions between a special group of technical experts, which consulted with the main representatives of the pensions sector.
Pension working groups suggested that the way forward was the introduction of a third pillar pension. Although previous PN governments had been given this suggestion, they did not act on it and all they had done was raise the retirement age.
The government was keeping its electoral promise not to raise the pensionable age and that the age would not be pegged to life expectancy. There were measures to protect people, such as the tapering concept introduced for those who return to work after registering as unemployed for a number of years. There were also other initiatives for single mothers.
Dr Farrugia said people had to understand that things did not always pan out as planned, and one had to look not only at investing in the third pillar, which would help but would not solve all problems. The government was evaluating how it could help those who had missing contributions, to ensure that as far as possible people could lead a better life, he said.
Silvio Parnis (PL) and Clyde Puli and Tonio Fenech (PN) also took part in the debate. Earlier in the day, during a news conference, Mr Fenech explained the Opposition’s reaction to the Bill.