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In the letter “The Privileged” (MaltaToday 14 May 2006) Mr Micallef expressed his worries about the gradual raising of the pension age to 65. This time from the aspect that most MPs would support such a change, as most are unlikely to be affected by it as they are in their fifties.
Unfortunately one of his premises is incorrect. The pension age of parliamentarians is already 65. This is the age when the Treasury starts paying a pension to Ministers and MPs with at least two parliamentary terms to their credit.
While the age at which one stops working is important, an adequate pension is not less so. I doubt whether there are many people who prefer to retire early and eke out an existence especially in their later years, to working two or three more years and living reasonably comfortably.
To my mind it would be better to apply energies to ensuring that pensions are really adequate and remain so throughout a pensioner’s declining years. This is where Ministers and MPs can teach us a lesson or two.
The pension arrangement they have put in place provides for payment of a pension of two-thirds of salary at age 65. The pension is indexed to salary. This is best illustrated by an example. In 1990 an MP who had been a Minister received a Treasury pension of Lm3,494.667 (i.e. two-thirds of salary of Lm5,242) on reaching the age of 65. In 2006 his Treasury pension has increased to Lm10,044 (i.e. two-thirds of a Minister’s current salary of Lm15,067). This represents an increase of 287.41%. In addition he also receives the flat rate of Social Security pension.
Not so John Citizen. A person who retired in 1990 and the average of whose salary in the last three calendar years of employment was Lm5,250 received a social security pension of Lm3,500. So Minister and private citizen were at the same level. Not any longer. In 2006, when the employee’s successor is in receipt of a salary of Lm13,500, the pensioner receives a pension of Lm4,630, i.e. 32.285% more than his pension at time of retirement. This represents 34.296% of the current pay of his former post. How’s that for adequacy?
In this scenario, among the questions which come to mind are: is there any justification for the vast difference in treatment? Is adequacy of pensions less important than retaining 61 as a pension age?
Albert J Tabone
St Julians
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