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MT 22 January 2017

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7 JAMES DEBONO THE Central Bank of Malta has warned in its quarterly review that without further measures encour- aging people to work longer over and above 65 years of age, the gov- ernment may have no option but to decrease spending or raise taxes to finance its sizeable pension bill within just 10 years. After remaining unchanged for decades, Malta's retirement age started to rise again in 2012 as a result of a reform approved by the first Gonzi administration in 2006. The gradual process will see eve- ryone's retirement age rise to 65 by 2026. But the Central Bank warns that the beneficial economic impact of the pension reform will fizzle out in 10 years' time, and that the gov- ernment may have no choice but to cut its spending or raise taxes to prevent a contraction of Malta's gross domestic product due to the rising pension bill. Such was the increase in retire- ment age crucial for Malta, that had retirement age stayed at 61 and 60 years for men and women respectively, the number of work- ing-age people (15-61) would have been 8% lower in 2022. And that means, less tax and social security contributions to finance pensions. By 2026 now, the potential work- ing age population will be 24,171 more than if the pension age had remained at 61. Lower spending on pensions and higher revenue from taxes on income has already improved the deficit-to-GDP ratio by 0.2 per- centage points in 2013 and 2014. That means that Malta's over- spending is a smaller portion of to- tal economic growth than it would have been without increased tax revenue. But in 2026, the impact of pen- sions will see this same ratio rise to 1 percentage point. So without a further increase in retirement age – which means having more people working to sustain tax rev- enue – Malta's public debt could increase by 7.7% of GDP in 2026. The Central Bank report warns that if the retirement age does not increase, the economic and fiscal benefits of the gradual increase in pension age to 65 would be sub- stantially lower. "Lengthening of working lives" remains of crucial importance for the government. MATTHEW VELLA THE University of Malta's recently- elected rector, Alfred Vella, is one of Malta's highest-paid public sec- tor men, pocketing a €150,000-a- year salary for the top job at the university. His salary is considerably more than his predecessor's, Juanito Camilleri, who apart from his pro- fessor's salary of at least €70,000 in 2015, was also paid €54,000 as part of his consultant's role to the Office of the Prime Minister. Prof. Camilleri was prised away from the private sector in 2007 where he captained telecoms firm GO plc, spending 10 years at the helm of the University. Apart from a new ICT faculty under his tenure, Camilleri saw three other faculties come into being that previously ex- isted only as institutes or centres of learning. A professor at the University of Malta is paid €73,139, while an as- sociate professor is paid €62,021 and a senior lecturer €50,656. The pro-rectors, sociologist Prof. Godfrey Baldaccino, head of the international relations department Dr Carmen Sammut, and head of the marketing department Prof. Tanya Sammut-Bonnici, receive a €25,000 annual allowance together with the salary according to their substantive status. In addition, the pro-rectors are entitled to a top-up of their health insurance policy and mobile teleph- ony services. The University rector is also entitled to a university car, telecoms services, and a top-up of health insurance. Prof. Vella, a chemistry expert, was pro-rector together with Juan- ito Camilleri, and won the consen- sus of the deans of all the faculties at the University of Malta. The other contender for the job was Godfrey Baldacchino, professor of sociology and board chairman of the Centre for Labour Studies. The deans do not elect the new rector but their support carries significant weight. It is the University council that elects the rector for a five-year term, which includes members appointed directly by the government. Prof. Vella has commented that the University's stipend system for students, which costs over €24 mil- lion, is probably not sustainable. He has suggested a specific entry requirement, such as a qualification in the Maltese language, to qualify for the stipend. "I don't think it unreasonable for the University of Malta, as a State university, to de- mand knowledge in academic fields that would include Maltese… Ba- sically, you will get a stipend and a free undergraduate education without fees if you know Maltese… We have to obviously see what can be done legally and within the EU framework," he had told The Times. This would exclude students from EU member states and lead to the number of paying foreign students increasing exponentially. "I would consider anything and everything that allows visiting students to come to the university and pay for the services they receive without in- flicting any pain on local students," he said. maltatoday, SUNDAY, 22 JANUARY 2017 News New university rector on €150,000 salary In 2026: work longer or pay more tax University rector Alfred Vella Central Bank: Government will have no choice but to cut spending or raise taxes unless people work longer

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