Issue link: https://maltatoday.uberflip.com/i/614946
maltatoday, SUNDAY, 13 DECEMBER 2015 15 his salary towards the second-pillar pension fund, with the employer contributing another 4%..." In the latest discussions, however, this proposal did not resurface. Az- zopardi expresses concern that questions such as these need to be answered. Private pension plans are vulnerable to stock market fluctua- tions, and the recent economic crisis in Europe left many people on pri- vate pensions penniless. Azzopardi warns that a similar scenario may unfold here, unless the fund is guar- anteed. "What we don't want is for the government to totally abdicate its responsibility. The government should intervene to at least guar- antee the capital forked out by em- ployees. We should also look at what happened in other countries. Three years ago, a similar fund in the UK – where there is no government con- trol – lost 23%..." The success of this system also de- pends on how it is implemented. "It could be mandatory – as, I believe, was the original intention – or it could be voluntary. When Ireland introduced a voluntary second pillar pension, only 12% availed of it…" Nor is this the only factor. At the recent seminar, it was suggested that employers pay no contribution at all. "One country was mentioned as a model where this works in practice: New Zealand, I believe. But if this is the way we are going to go about it, we may as well not introduce any- thing at all. We should either intro- duce a second pillar pension along European lines, or nothing…" This leaves the third pillar, which can (for brevity's sake) be described as purely private pension schemes. "We have nothing against the third pillar. But we don't want there to be too many tax incentives supporting it. That there would be a few is un- derstandable. But in other countries, studies found that this widens the gap between rich and poor. And yet, in Malta this system is often justified on the grounds that it reduces pov- erty… He shakes his head in mock con- fusion. "This has nothing to do with reducing poverty. Who will benefit from this measure? Only the peo- ple who can afford to make an extra contribution. People who can't, will remain at the same level. This is also why we don't want a lot of tax incen- tives. Otherwise, we'd have a situa- tion where tax money that is paid by everyone, will be utilised only for the benefit of those who can afford to pay for a third pillar pension. It would be unfair on those who can't…" Having said this, Azzopardi reiter- ates that there is nothing wrong with the principle itself, if applied fairly. This brings us to the implementa- tion part. Despite having been on the cards all these years, neither first nor second pillar have ever materialised. What has materialised, however, is an increase in retirement age to 65. The official justification is that people are living longer. Isn't this just the thin end of the wedge, how- ever? "I brought this up at a recent meet- ing chaired by the European com- missioner for Employment. I stood up, and said that I disagreed with the Commission that the pension- able age should increase in step with longevity. I feel it should increase ac- cording to how much one's healthy years increase… Lifespan alone is not a fair meas- urement, he argues. "If people are living longer, it doesn't mean that they are healthy all that time. There are people with dementia, and other ailments which render them unable to work. You can't include those in your calculations…" Besides, Azzopardi also argues that while life expectancy has indeed gone up, the average span of healthy years has actually gone down. "When I pointed this out to the Commis- sioner, he replied that we still had to look at the statistics, because differ- ent member states measure things differently. But he acknowledged the problem, and said that 'we will have to see about it'…" All the same, according to the lat- est recommendations by the Euro- pean Commission, the official target remains to raise the pensionable age according to average lifespan… without taking into consideration the average health of people living longer. "And the government of Malta agrees, because according to the lat- est report, one of its recommenda- tions is 'life expectancy'…" All along there remains the ap- parent contradiction, whereby the economy is widely perceived to be in good shape, which somehow still can't afford to implement a ba- sic reform, affecting society's most vulnerable, which we all know to be necessary. "The cake grew bigger, yet some- how we got a smaller slice," Az- zopardi points out wryly. "This, ulti- mately, is what annoys us the most." Interview Are poverty and social exclusion among the elderly on the increase? Government statistics suggest not, but National Pensioners Association chairman MOSES AZZOPARDI begs to differ bigger cake PHOTOGRAPHY BY RAY ATTARD