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News • June 27 2004


The pensioners’ plight

Albert Tabone, President of the National association of Pensioners says both Government and the Opposition are missing the point on pension reform - By Karl Schembri


As government expenditure on social benefits continues to rise, Malta’s 60,000 pensioners and tomorrow’s potential pensioners are constantly being reminded that the present pensions system is unsustainable, although the government has, so far, not committed itself to concrete proposals. On the other hand, the Opposition denies there is an upcoming pensions problem and says that by creating jobs a crises would be averted.
But pensioners accuse both Government and Opposition of missing the whole point as the problem is much wider.
“It’s not just pensions,” says the President of the National Association of Pensioners. “It’s the whole system of government; it’s how government spends its money; it’s social security as a whole; it’s health, it’s education, it’s stipends, it’s everything.”
Albert Tabone and his association have been putting forward proposals for the reform of the pension and social security schemes for years while the government kept commissioning reports and postponing decisions. Only last year, Lawrence Gonzi, as social policy minister, had said it was the government’s turn to present pensions reform proposals, while then Finance Minister John Dalli had sparked controversy when he said he was about to introduce “unpopular measures” by the end of May 2003.
“We have wasted five years,” Dalli had said, questioning the effectiveness of the welfare reform commission. “Nothing much has happened, not even behind the scenes.”
Which means that another year has been wasted and the problem has only got worse.
“The government isn’t saying much,” Tabone says when asked about the supposed consultation going on at the Malta Council for Economic and Social Development and on the Welfare Reform Commission.
“It isn’t saying anything. Are we talking about pensions only? Are we talking about pensions and welfare-related benefits, such as sickness, unemployment, disability benefits?
“The welfare reform commission was supposed to look at everything, that is social security, not health. Health came in late in the day because suddenly somebody woke up to the fact that the cost of the new hospital, whenever it’s up and running some time in the future, would be around a Lm1 million a week.
“I think it would be nearer Lm2 million by the time it’s finished. In any case, the money has got to come from somewhere. It can’t come from taxation, and contributions have been paid by persons over the years to get pensions and a number of other benefits, not health. Health was something which should always come from taxation.
“Now the World Bank report has limited itself only to pensions, and that is already contentious for us, because quite frankly the problem is not only pensions. That’s only in the medium term, but in a few years’ time we’re going to have problems with health.”
So they’re not even agreeing on the extent of the problem.
“Quite honestly we’re not even discussing.”
But the government should come up with proposals by the end of this month.
“Well, my suspicion is that the government will suddenly come out with its own proposals in the form of a White Paper and then ask for people’s comments. Now I want to be honest here, I do not blame government altogether because the only organisation which put up any concrete suggestions has been this association (after the interview the National Youth Council put forward its proposals too).
“Others are hesitant; they know what they want, they know what they don’t want, but they hesitate to come out and say frankly what they want, what they can live with and what they can’t live with.”
To make things worse, Alfred Sant is not even agreeing that there is an upcoming pensions crisis. He says that if we create jobs the problem would be solved.
“The problem will not be solved. It would be mitigated, not solved. Look, the problem is immediate. We will start feeling the problem in three, four years’ time, at an increasing rate.
“In 20 years’ time we’ll be nearing disaster. You cannot take the option proposed by Dr Sant. We’ve been living an ‘artificial life’ in this country for the last 20 years. The feel-good factor has been feel-good because government has consistently obtained money through taxation, through loans, etc, and has dished it out without much thought of efficiency, without much thought of the long-term effect this was going to have, while increasing dependency of people on government.
“The insistence however should be that it’s not just pensions that require reforming, but the whole system of government. The earlier we recognise that the country has a whole raft of problems which we must deal with and start doing something to deal with each of them, the better it will be for all of us.
“But I emphatically repeat: pensions are not the only problem the country has, we have different problems all touching on government financing, which have not been dealt with, and that now have to be dealt with all at the same time.
“Concurrently the state has to run a campaign to encourage investment, create jobs, move from non-productive to more productive employment…which is a very tall order. Our association has been saying this year in, year out, but nobody ever listened.”
What does Tabone say about Sant’s promise to keep pensions “as they are”?
“Quite honestly I do not understand what he means by that. If he’s saying that you keep everything as it is and pay out a flat rate increase to all pensioners, that is just not good enough. Take myself: I am receiving a pension from government which is roughly Lm4,000 less than that of a person who retired last year.
“Now I don’t expect to receive the same amount, but I do expect something better than what I’m getting. You see … the problem is that everyone keeps coming up with partial solutions, when this is such a complex issue.”
Tabone says the main problem with the World Bank report is that is substituting sustainability with affordability.
“When it comes to social justice, sustainability should not be given that meaning, more especially when people have paid for their contributions and they expect a return in due time,” he says. “Existing acquired rights of current contributors must not be altered unilaterally. An indispensable consideration is that the standard of living of different categories of pensioners is maintained.”
Meanwhile, ministers and parliamentary secretaries got a staggering 23 per cent wage increase since 2001. This has also meant a 23 per cent increase in the pension of those who have retired since holders of political office get the full two-thirds amount of their salary in pensions, unlike ordinary citizens.
Ministers and holders of political office have their pensions paid by the Treasury from the Consolidated Fund. The scheme is regulated by the Members of Parliament Pensions Act. Unlike normal pensions paid under the Pensions Ordinance, the minister’s pensions are revised with every change in the honorarium or salary and there is no ceiling for their pensions.
On the other hand, the ordinary citizen’s pension is calculated on two-thirds of a maximum income of Lm6,750. For the ordinary citizens, the maximum pension they can get is Lm4,500. The ceiling was imposed on citizens other than MPs during the wage freeze in 1981, and it has never been revised since.
“If we take into consideration inflation since 1982 to date, the figure now should be around Lm10,500,” Tabone says. “Now really, what we suggested is that you’ll start collecting more contributions on the basis of that revised figure, allow a number of years for those retiring to ensure that they’ve paid a number of contributions at a higher rate before being given a pension, and for existing pensioners you make certain adjustments gradually, so those in their 60s might benefit from something in the long run. It’s only fair.”
Tabone says the government is bound to submit a National Strategy Report on pensions to the European Commission by 2005, but it does not appear that the process to compile this report has even started.
“Certainly, there has been no consultation on this,” Tabone says. “In other countries, working groups have been set up with associations of pensioners, unions, etc. As far as we know the Maltese government hasn’t even started the process.
“I have an open mind about the EU. I’m not a Eurosceptic, and I’m not an EU fanatic either for one simple reason: because I was always convinced that the government would never be prepared enough for EU membership.
“And this is being seen clearly now: we’ve been concentrating on the campaign to get into Europe, we were unable to concentrate concurrently on getting our act together in order to cope.
“Now the government is saying it has to rush reforms because of Europe; no sorry, it’s not because of Europe, it’s because of the total incompetence of our government. That’s the problem unfortunately.
“Governments here seem unable to listen, or they listen and they don’t act. We can’t always be wrong. We don’t think we’re always right, but we can’t always be wrong for goodness sake.”
Does Tabone feel pensioners’ associations are being ignored because, unlike unions, they have no bargaining power?
“We can always resort to the others’ game by saying that there are some 70,000 pensioners with a vote and unless…but it’s not a game we like to play.
“We might be forced into that situation … we might be forced into fielding a candidate for the European Parliament to represent pensioners.
“This idea of national issues being tackled in a partisan matter is nonsense. We tend to forget that this is a country of 120 square miles, with less than 400,000 people, and yet we have to undertake the burdens – and they are burdens believe me – of a far larger country.”
In the meantime the welfare gap continues widening and the pensions problem keeps getting worse.

 

 

 

 





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