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Karl Schembri
Labour broke a decade of silence on pensions yesterday by saying that there is no crisis after all.
The Opposition’s reaction to the government’s White Paper is to launch yet another consultation period in three years’ time, and in the meantime it proposes raising the two thirds pensions ceiling without saying how government should finance the new expenditure.
Presenting the Opposition’s vision on pension reform for the first time following years of censoring MPs from discussing it in public, Labour Leader Alfred Sant said “no crisis appears likely to rise before the years 2025 and 2030”, countering strong indications that the ageing population will put more pressure on public finances at a time when the number on employees is on the decline.
It was also the first time the MLP took a public stand since Prime Minister Lawrence Gonzi announced his plan to propose his amendments in Parliament just before summer recess.
Sant said raising retirement age to 65 was an arbitrary measure opposed by his party, but little does the four-page position statement adopted by the Labour executive and parliamentary groups and presented yesterday to the press say concretely how it intends to make the system sustainable.
No mention is made of the government’s sketchy plans to introduce the second and third pillar pension schemes – Sant just said the MLP would vote against the reform in Parliament if government goes ahead.
He also said nothing about the proposed measure to scrap the present mechanism whereby one’s pension is calculated over the best three years of the last decade worked and span it over four decades instead for both employees and self-employed.
In fact the MLP’s position is basically yet another timetable of consultations to start in 2009, a national congress the following year leading to another White Paper, and the start of the ensuing reform in 2011 that would happen with “national consensus”.
Asked how Labour proposed balancing the impending decrease in contributions widening the welfare gap, Sant said his party would tackle pensions holistically with other social benefits and health services reforms, while increasing women’s participation at work.
“When one considers the financing of pensions as of now, one cannot but conclude that if the monies paid by the government, workers, employers and self employed in national insurance are considered as being uniquely allocated to funding contributory pensions, then there should occur no deficit in public finance on this matter, today or in the foreseeable future,” Sant said. “This picture changes if to the payments that the government must make on pensions, as compared with its receipts form national insurance, one also adds the payment it makes by way of non-contributory and invalidity pensions, plus other social benefits.”
That is part of the present problem with the public funds meant to finance pensions being also spent on other benefits, but Sant would not be drawn into how the rest of the non-contributory benefits would be funded if separated from the overall account.
Still, he said the state should somehow keep its pensions expenditure low.
“While the state should remain committed to provide full social protection to those strata of society which are in greatest need, it is crucial that the changes being introduced do not largely serve to further increase unsustainably government expenditure, or to seriously deplete government’s revenue, at a time when the economic growth rate is unsatisfactory, which is the case now.”
Slamming Gonzi’s administration for not having an electoral mandate to change the pensions system, Sant pledged to promise in the forthcoming election manifesto “to undertake a reform in the pensions system meant to guarantee sustainability and adequacy” and called on the PN to do the same.
kschembri@mediatoday.com.mt
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