The editorial of October 25 (‘Great expectations dashed’) tries to give the impression that in recent years pensioners have not seen an increase in their income commensurate to the rise in the cost of living. According to this newspaper, this reflects pension increases that are below expectations, combined with a plunge in pensioners’ other incomes. The conclusion made by the Times of Malta, however, fails to stand the test of official statistics.
Eurostat data in fact shows that between 2012 and 2017, the median equivalised net income of Maltese persons aged 65 and over rose from €9,977 to €11,573. This marks an increase of 16 per cent, which contrasts greatly with the increase of just six per cent observed among EU citizens aged 65 and over.
In fact, whereas in 2012 the average Maltese person aged 65 and over had an income equivalent to 65 per cent of that of his European peers in 2017 (that is, before the increases announced in the latest two budgets) this had already risen to 71 per cent.
During the period 2012 to 2017, the retail price index rose by five per cent. This implies that the median net income of Maltese pensioners grew by three times the cost of living during this period. Some argue that one should not look at the retail price index as a whole, as pensioners are less affected by changes in prices of some services such as private transport or communications.
However, even if one looks at the percentage increase in just the price of food and health products, which make up a large part of pensioners’ outlays, the increase in the last five years was significantly less than the rise reported by Eurostat in the median net income of pensioners.
Even the most recent study conducted by Caritas has concluded that improvements in minimum pensions mean that those on the lowest pensions now are able to afford the essential budget for a decent living, something that was not possible with the previous level of benefits.
Not less than 64 Budget measures were implemented for pensioners, the elderly and disabled persons from 2013 to 2018
A married couple depending on one non-contributory pension have seen their benefits rise from €8,213 in 2013 to €9,492 next year. This marks an increase of €24.20 a week. Similarly, a single pensioner depending on the national minimum pension will get €8,743 in benefits next year, up from €7,391 in 2013, implying a weekly increase of €26.
Those on the lowest pensions will see their benefits rise by between 12 and 18 per cent. Under unchanged policies, these pensioners would have seen an increase equivalent just to the cost-of-living allowance, which would have resulted in a rise of less than €13.
Analysts and stakeholders have further recognised that measures in favour of pensioners and persons edging closer to their retirement age have decidedly strengthened the adequacy of pensions and contributed to lower the poverty risk of people aged 62 and over.
The enhancement of contributory and non-contributory pensions enacted over the past three years will resume in the new year, as announced in the Budget speech on October 22.
Apart from the substantial increases given to pensioners in the last four budgets, several other measures have been adopted to address the adequacy of pensions of specific sectors of the pension population, including also widows, invalid and disabled pensioners.
Moreover, pensioners aged 61 and over are now no longer liable to pay tax on income arising from their pensions up to a maximum of €13,434 plus on an additional €1,000 from any income source for pensioners with a married computation. Besides, they will again be given the opportunity to invest in specially-tailored saving bonds with higher than market interests to augment their incomes and overcome the decline in the interest rates on fixed bank accounts over the past few years.
These are only a few of the measures introduced in these last five years. In all, not less than 64 Budget measures were implemented for pensioners, the elderly and disabled persons from 2013 to 2018, and another 12 measures will be implemented next year.
Indeed, these measures are dashing poverty among pensioners, not their expectations.
Claudia Cuschieri is spokeswoman, Ministry for the Family, Children’s Rights and Social Solidarity.
This is a Times of Malta print opinion piece