Issue link: https://maltatoday.uberflip.com/i/1419860
3 LETTERS & EDITORIAL maltatoday | SUNDAY • 17 OCTOBER 2021 Mikiel Galea Letters & Clarifications Contributory pensions PENSIONERS have been segmented into two categories: group A represent- ing those born on and after 1 January, 1962; and group B, born on and before 31 December, 1961. The latter includes current pensioners and those who will retire up to the 31 December, 2026. Now, the date of retirement went up to 65 years from 61 years. A person born on or after 1 January, 1969 has to work and pay social security contributions for 41 years instead of 30 years, to be enti- tled to a pension at full rate. The drastic change in the calculation of the yearly contribution average, which has a direct effect on the proportion of two-thirds pension entitlement, will result in reduced rates of pensions for those who have a deficiency in their contributions record. Female employees will be the worst hit and the gap between genders will be widened. The new format to calculate pensiona- ble income will have a negative effect on the rate of pension when compared to that applicable under the old system. To be entitled for the lowest rate of pension, a person needs to have a yearly contribu- tion average of €15. The introduction of a New Maximum Pensionable Income (MPI) is applicable only to Group A Pensioners: this drastic and discriminatory change leads to the reality that the maximum rate of two- thirds pension paid to Group B will be €72 per week less than that of Group A. This is calculated on current figures. The National Minimum Pension is be- ing replaced by the Guaranteed National Minimum Pension: it is presumed that this measure will address the risk of pov- erty problem for low-income earners. It is also expected that group B pensioners will be included. Where a person is entitled to invalidity pension, they are entitled to a National Minimum Invalidity Pension at single or married rate as the case may be. In case category B pensioners are not eligible for a GNMP, it will result in a financial problem that will push them further towards the risk of poverty. The Social Security Act provides for a widower's pension at a flat rate as well as a Survivors Pension for persons who are entitled to a two-thirds pension as the case may be. The rate of survivors' pension applicable depends entirely on the pensionable income of what the deceased person is entitled to on the date of his demise. At law, the date of death of the person is considered to be the date of retirement to assess the pension. The rate of survivor's pension applicable depends on various factors, such as the date of birth of deceased spouse; and whether the wife is entitled to a pension on her own right. Where a wife is entitled to a pension on her own right, the survivor's pension is calculated on the two-thirds of hus- band's pensionable income. On the other hand, where the wife is not entitled to a pension in her own right, the survivors' pension is calculated at five-sixths of two-thirds of the hus- band's pensionable income. The new system now provides that there will be a difference of €72 per week in the rate of survivors' pension between one spouse and another, even in cases where the partners pass away on the same day. When the yearly re-assessment of pension is carried out, the new condi- tions which are applicable in the case of Group A are different and better than those of Group B. The end result will be different and higher rates of pension between the two groups. The above changes by the pension reform group and approved by the gov- ernment were supposed to be carried out for the sustainability, adequacy and solidarity of the two-thirds pension. From the realities mentioned above it can be stated that while the problem of sustainability has been addressed, it failed miserably to upgrade the adequacy and solidarity of contributory pensions indicated above. In the case of Group B pensioners, the reform broke the cycle of togetherness, created division between pensioners, and finally brought to an end the soli- darity dimension that existed between the workers and pensioners since the introduction of the two-thirds pension scheme in 1979. It's a pity that the above concerns were not mentioned in budget so that current and future pensioners will be aware where they stand as pensioners who depend entirely on income from contrib- utory pensions. Carmel Mallia Lija