Matthew Vella
Expenditure on social security benefits rose by 6.7% during the first six months of 2009, driven mainly by retirement pensions, contributory bonus and pensions in respect of widowhood.
Total expenditure on social security benefits amounted to €354.3 million during the first six months of 2009, up by €22.2 million over the corresponding period last year. This reflected higher expenditure on contributory benefits amounting to €21.1 million, as shown in Table 1.
At the same time non-contributory benefits increased by €1.1 million.
The increase in contributory benefits was essentially the result of a €14.8 million growth in pensions in respect of retirement, which amounted to €169.4 million for the first six months of 2009.
This increase was primarily underpinned by outlays on the two-thirds pension, in part reflecting a rise in the number of beneficiaries.
However invalidity pensions during the period under review decreased by €1.8 million, and so did benefits relating to industrial injuries. Pensions in respect of widowhood increased by €2.1 million whilst the Contributory Bonus increased by €5.6 million.
Non-contributory benefits increased by €1.1 million over the comparative period in 2008. This increase was mainly attributed to the €1.1 million rise in Social Assistance. The increases in Old Age Pension and Medical Assistance were offset by declines in Supplementary Assistance, Children’s Allowance, Disability Pensions/Allowance and the Non-Contributory Bonus.
The Today Public Policy Institute, an independent think-tank sponsored by MaltaToday, has raised the alarm over a possible collapse of Malta’s social security system, unless serious action is taken to mitigate astronomical present and future costs.
In a detailed report on the sustainability the current system, the institute warns that if the status quo is not revised with a view to improving sustainability, “the system (will) most likely collapse under its own weight.”
According to figures released by the National Statistics Office (NSO) in April 2006 and 2008 respectively, recurrent revenue derived from social security contributions increased from €377 million in 2000 to €480 million in 2007. On the other hand, recurrent expenditure on social benefits amounted to €409 million in 2000, increasing to €572 million in 2007. Over the period under review revenues rose by 27%, in contrast to the increase in expenditure which rose by 40%.
Despite the gap between contributions and expenditure, the current system’s sustainability is ensured through the injection of funds derived from other sources of government revenue, amounting to 50% of the total contributions collected throughout the year.
Nonetheless, given the decreasing revenues and the accelerated growth in expenditure, a surplus of funds is no longer expected past 2011/2012. In fact, the extrapolation for year 2015 shows a shortfall of funds to the tune of €191,950,000, a far cry from the surplus of €156,403,000 in the year 2000.
Any comments?
If you wish your comments to be published in our Letters pages please click button below. Please write a contact number and a postal address where you may be contacted.
Download front page in pdf file format
All the interviews from Reporter on MaltaToday's YouTube channel.
