Chamber, GWU want flexi-employment for retirees who want to work after 65

Chamber and GWU join forces in pension proposals to government

Members of the Chamber of Commerce and General Workers Union addressing the press outside the House of Representatives
Members of the Chamber of Commerce and General Workers Union addressing the press outside the House of Representatives

​The Malta Chamber and the General Workers’ Union have agreed to work together to present to the government a common position on key pension reforms.

The stakeholders want a replacement of the existing ‘all or nothing approach’ to early retirement with a flexi-employment approach which allows workers to opt out the 40-hour week whilst remaining active in the labour market.

To ensure the flexi-employment approach does not become an exit route from retiring at the statutory retirement age, the pension for pro-rata workers should be at 50% for those retiring at 61. 60% for those retiring at 62, 70% at 63, and 85% at 64.

Persons who select flexi-employment for retirement would have to work for a minimum set of hours, established through a formal contract with employers and registered with Jobsplus to benefit from the drawing down of the retirement pension.

The two bodies also said the top-up incentive should be replaced by a positive, rather than negative, actuarial rate so that more persons are incentivised to remain fully active in the labour market and defer the draw-down of their pension.

They also called on the government to implemented a 2015 Strategic Review on pensions that encourages workers to defer retirement, but with a more aggressively positive actuarial rate for their pension.

They also said taxation for post-retirement employment should not deter pensioners from continued active employment.

“Both The Malta Chamber and the Union strongly underline that a carefully designed workplace pension based on the principles of opt-in on employment with the choice of opt-out is introduced in Malta. Such voluntary opt-in on employment pensions schemes with the choice of an opt-out can be designed in a manner that creates no social tensions or adverse impacts on both employers and employers,” the two bodies said.

They said employers must be nudged to contribute on behalf of their employees into voluntary pensions; while employees who earn below a certain income should be excluded from opt-in so that no negative pressures are placed on their disposal income, while keeping their right to opt-in should they wish.

“Each employee will have the right to opt-out or suspend their contribution. The contribution that an employee will pay, which will continue to be subject to a fiscal incentive, will be the annual minimum requested by the pension provider selected by the employer or that selected by the employee,” the two bodies said in their recommendations.

“The only obligation to be placed on the employer is that of presenting information on retirement on the engagement of an employee, enrolling an employee in the pension provider selected by it or that chosen by an employee, managing the monthly contribution payment deducted from the employee’s wage; and transferrin this contribution to the selected pension scheme provider.”

They also said that the pension scheme should be introduced incrementally over five years, initially targeting large employers and subsequently rolling it out to micro and small enterprises.