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To answer your question, I should point out that after eight years of failed target dates, out came the PM with a half-baked measure which is to give rise to social injustice and leave many loopholes.
Do all those concerned know that all reports, both local and international, state that the demographic problem shouldn’t hit us before 2025/2030? Are they aware that with our economic growth and general labour situation, a new pension system is immediately compromised?
It’s imperative that economic growth is increased at least on par with our European neighbors. Job opportunities should also be increased to address both the unemployment situation and the surge of would-be pensioners who remain on the labour market for additional years.
Any pension reform system is severely crippled by the budget deficits and by the ever-increasing public debts we have to bear due to Nationalist maladministration in the past. Countries that have balanced budgets and less debt can implement strategies Malta can’t afford.
Did Labour ever say that it doesn’t care about the problem that has built up? Wasn’t it Labour that commissioned two detailed reports during its short tenure? However the Labour Party doesn’t agree on the timeframe and expediency with which the government suddenly expects all to adapt, it believes that the problem is medium-to-long term. It also believes that before such a reform, or at least parallel to it, the Government should genuinely embark on strengthening the economy.
Labour also insists that for any pension reform to succeed the government should strive to have all parties concerned on board. Unfortunately in the course of our consultations with various pension groups, it was obvious that this was not the case. Finally, it is of utmost importance that all benefit from better pensions, as opposed to one higher income bracket benefiting at the expense of a lower one.
This is why such pension proposals are half-baked and socially unjust. In parliament I also pointed out that such proposals are actually going to serve as new social taxes. This is unfair, especially given the current situation of the middle and lower classes already overburdened with taxes and facing an ever-increasing cost of living.
Karl Chircop is MLP spokesperson for pensions
Pensions can certainly not wait until 2020. Pension is a bread and butter issue for all of us. Pensions are not the prized possession of a government but the prized possession of society as a whole. Pensions represent the mechanism that society has created to ensure that when people stop working at retirement age, they will be supported by the state, as reconpense for the taxation they would have paid previously. Therefore it is something dynamic and one cannot address pension reform at one go but gradually. Any delay in addressing pension reform would be condemning future generations to an old age life without pensions.
One needs to appreciate the important developments taking place around us. Previously this country had a perennial headache because it had to provide jobs for all those persons entering the labour market, while not enough were leaving. This made sure that government would collect enough money to pay for pensions at that time.
Now we have a situation where there are more persons who are retiring from work, than there are persons who are entering the labour market. This means that the pensions bill, as it is today, and without any reform, would be increasingly shared between fewer people. Thus the burden would get larger for each individual. Waiting till 2020 would be highly irresponsible as it would make the current pensions system unsustainable.
We also need to appreciate that life expectancy has increased over the years. This means that not only will we have more pensioners, but we will also have them around for a longer period. This is something positive as it is an indication of a higher standard of living. However the consequence is that the outlay will become larger, making it even more unsustainable.
The country has a choice. It either starts to address pension reform now in a gradual way, and with time the pensions system returns to being sustainable, or it can choose to wait till 2020, and let future generations to sort out the big mess we would have left behind us. Serious governance of the country requires that pension reform is started now, because this is the responsible (even if unpopular) thing to do.
Lawrence Zammit is an economist |
