Where the parties stand | Pensions

With pensions, the parties have a unique challenge: in order to address them adequately, they have to force themselves to look beyond short-term electoral goals. But how far ahead are the three parties looking?

Back in 2004, the pensions working group - chaired by David Spiteri Gingell -concluded that reforming the system was essential to safeguard the adequacy of pensions in future and also because changing demographics (declining working population, greater longevity, falling birth rate) are putting pressure on the sustainability of the present system.

The group has come up with a three-pillar system: the first pillar, which is the two-thirds government pension with several proposed changes; the second pillar, where people will be obliged to put some savings into a private pension scheme; and an optional third pillar proposing tax incentives to encourage people to save in other pension schemes.

The proposals include some fundamental changes, among them the gradual increase in the retirement age to 65 and that the contribution period for the accumulation of the first pillar pension to rise from 30 years to 40.

The Pensions Working Group also proposed linking the pension age to life expectancy,

Subsequently, the first Gonzi administration introduced the first phase of pension changes in 2006, including raising the pensionable age to 65 for both genders by 2026 and lengthening the contribution period.

It had also changed the calculation of pensionable income from the best three years out of the last 10 years to the best 10 years from the last 40 years.

A guaranteed national minimum pension payable at a rate of not less than 60% of the median income for persons born after January 1, 1962 had also been introduced.

In 2006, then social policy minister Dolores Cristina said that in her personal opinion, second pillar pensions should be introduced "sooner rather than later", adding that the government's position was that the second pillar introduction was a matter of "when, and not if".

In 2007, the medical review for invalidity pensions was made more rigorous and, following the 2008 Budget, pensioners were allowed to keep on working without any reduction in the pension while paying social security contributions.

Labour opposed a minor increase in NI contributions for higher income earners foreseen in the 2004 reform when this came in force two years ago.

But 10 years later, Malta still has not introduced a mandatory second pillar.

In February 2012 the European Commission called on Malta to accelerate its pensions reforms that had started in 2006.

In a White Paper on the issue, the EU Executive stressed that Malta should move fast in raising the retirement age and encouraging private pensions schemes.

At the same time, the Commission recommended that the island should stop promoting "early retirement schemes" as these worked against the prevalent target to increase the employment rate among older workers in Europe.

The EU has no remit when it comes to pensions, as this is Member State territory, according to the treaties. However, the Commission yesterday insisted that it wants to support pension reforms in member states as time is running out.

Malta has one of the lowest employment rates in the 55-64- year-old category, with just 30.2% of them being in employment in 2011. This means that less people are contributing to the pensions of older people.

Despite the imminent pension time bomb of the three political parties, only AD makes a reference to the need of a second pillar in its manifesto. On its part, the PN proposes an innovative idea of a pension fund for every newborn, in which the government would deposit €1,000 in a bid to encourage private savings.

All i know is that the Government is robbing me of what is rightfullu mine, that is, the government is stealing of me the sum of 131.36 euros every 4 weeks since the capping imposed by their good selves is limited to the capping. Those who never bother to pay thei NI and never studied to achieve a high pay are getting their 2/3 since its not exceeding the capping while people like me who have paid more NI than the needed 35 years (43 yearsin all), am treated like those who didn't bother. My friends wife who worked foe 13 years full time and 3 years foe part time she is getting a mere 200 euros every four weeks. The reason for the break in service was just because she had to bring up and take her of her kids. I also know these kids and they are an asset to this Nation, drug free and ciminality free.So were does social justice come in this. I hope that pl will rectify this injustice and those who deserve better will get their dues.