In a report published by the European Commission for 2019 about country specific recommendations, it has been declared that Malta, among other things,  had  only made limited progress in ensuring the sustainability  of  healthcare and the pension systems, including increasing the statutory retirement age and by restricting early retirement.

It was further stated that assessment of initiatives taken by the government so far pointed to very little or no impact on the sustainability of the pension systems but possible increases in non-pension income.

From the onset it has to be pointed out by pensioners’ organisations, representing about 100,000 pensioners or about one- fourth of the Maltese population, that, it is not in pensioners’ interest to put healthcare and pensions in the same basket. 

Although health and pensions are two very important pillars in the social area when it comes to sustainability, it is very important to treat them separately. It should be emphasised that Malta’s health care is free of charge. Members of Parliament boast a lot about this bonanza. However, they fail to point out that the expenditure involved is paid from the Consolidated Revenue Fund through revenue collected from taxation. 

It is quite different in the case of social security contributory benefits. The Social Security Act provides for the payment of social security contributions so that insured persons become entitled to work-related benefits, which include pensions.

Millions of euros are collected annually through contributions and the current trend of mass employment where more women and immigrant workers are joining the workforce will have a positive effect on the sustainability of the pensions systems.

Currently the revenue generated through the payment of social security contributions together with the contribution paid by the State as stipulated in the Social Security Act covers the expenditure needed to pay all work-related benefits including pensions. In fact there was a surplus of about of €270 million for the year 2018.

In view of the above reasoning, the European Commission was not correct in putting healthcare and pensions on the same footing because while social security contributory benefits are sustainable, there are serious problems with the sustainability of healthcare.

While social security contributory benefits are sustainable there are serious problems with the sustainability of health care

In light of the above, pensioners’ organisations do not agree with the European Commission where it stated that measures taken so far by the government as regards pensions had very little effect or  no impact in the sustainability of the system.

Hereunder is a list of measures taken so far by the government to tackle the problem of the sustainability of the pension system: 

Retirement Age increased from 61 to 65 years; an insured person becomes entitled to a full rate of pension if contributions are paid for 41 years instead of 30 years; to be eligible for the lowest rate of pension a person has to pay contributions for 15 years instead of 10 years; changes in the calculation of the contribution average and the pensionable income, two factors which determine the rate of pension applicable in each and every case;

The creation of a new maximum pensionable income, which determines the maximum rate of pension; a new method to carry out the yearly revisions of pensions; the introduction of a Guaranteed National Minimum Pension to replace the National Minimum Pension.

A major change introduced by the government is the fact that pensioners have now been segmented into two categories.   Category A are those who were born on January 1, 1962 and after and Category B representing those persons who were born on December 31, 1961 and before. 

Category A persons are paying social security contributions at a higher rate than those paid by category B.

The above measures are far more than the two mentioned by the Commission and therefore the problem of sustainability of the pension systems is being addressed.   On the other hand no action has been taken so far to solve the sustainability of health care and it appears that there is nothing planned for the future.    

In this scenario where the problem of sustainability of pensions is being taken care of, for it is important to address the adequacy of pensions as it has a direct impact on the well-being and dignity of elderly people.

Pensioners organisations wish to point out that 25 per cent of pensioners are at risk of poverty as their disposable income is less than 60 per cent of the equivalent median income. 

To continue ignoring the plight of thousands of  pensioners for a decent rate of pension is shameful and outrageous.

Carmel Mallia is president of the Alliance of Pensioners Organisations.      

This is a Times of Malta print opinion piece