Issue link: https://maltatoday.uberflip.com/i/744537
maltatoday, SUNDAY, 30 OCTOBER 2016 News 3 MIRIAM DALLI THE Alliance of Pensioners' Organisations has proposed an indexation system that would strengthen the purchasing power of pensioners. The system, it was argued, would ensure that the pensions reflect the basic costs required to escape the poverty trap and ensure that the elderly live their life in dignity. Alliance president Carmel Mal- lia argued that the pensioners' biggest problem was the explo- sion in prices of basic items such as meat, fish, vegetables, fruit, house maintenance, doctors' vis- its, IT and rent. "It's a fact that vulnerable peo- ple such as the elderly are not reaping the benefits of economic growth – on the contrary, they are suffering more. A good in- dexation system of pensions is the best tool to safeguard pen- sioners' purchasing power," Mal- lia said. While Budget 2016 increased the minimum pension to €130 a week, with an additional €18 al- lowance, the measure wasn't ap- plied to married couples on one pension. Their total income had gone up to €159 a week, com- pared to a single's €147 weekly income. According to the pensioners, the average income for a cou- ple should stand at €221 a week. Budget 2017 will implement a €4 weekly increase, which the pen- sioners describe as miserly. The budgetary measure will target some 2,500 people who are on minimum pensions. Finance Minister Edward Sci- cluna also announced that in- come tax on contributory retire- ment pensions – which reach up to an annual maximum income of €13,000 – will be entirely abol- ished. Elderly people on treasury pensions, service pensions and private pensions will not be taxed for their first €13,000. While praising the measure, the alliance noted that there were no concrete proposals for some 75,000 current pensioners born before 31 December, 1961. The alliance argued that the pensions reform – which is in its first year of implementation – has created an injustice. As a result of the reform, two cat- egories of maximum pension- able incomes were created – one for those born before December 1961 and those who were born after January 1962. As a result of these categories, those born be- fore December 1961 will receive €230 whilst those born after Jan- uary 1962 will receive €283. "In between five to 10 years' time, this change will be the rea- son why thousands of pension- ers will be capriciously brought closer to the poverty line," Mallia said. The alliance described the guaranteed national minimum pension as a positive step, albeit it will negatively impact the max- imum pensionable income. This year, the highest pensionable rate increased by €1.17 a week; on the other hand the minimum pen- sion for a married person went up by €3.80 whilst that of a single person increased by €11.61. "This difference nullifies the principle of earnings-related benefit because those who paid a small contribution are receiv- ing more than those who paid a higher rate of national insur- ance," Mallia explained. "The gap between the mini- mum and maximum pensions is growing narrower." The British service pension re- mains another bone of conten- tion between the pensioners and the government. Whilst service pensioners continue to receive the €200 a year pension adjust- ment, this does not resolve the injustice that was created years ago – 37 years to be precise. Ex-servicemen argue that they should be entitled to the Maltese two-thirds pension – introduced in 1979 – along with their British service pension. "It's a pity that whilst we're celebrating 60 years since the in- troduction of contributory social benefits in Malta, the alliance is talking about shortcomings that hinder the progress of state pen- sions," Mallia said. also be revised, with eligibil- ity requirements such as the need to have less than €10,000 deposited in a bank account re- moved. In an attempt to clamp down on tax evasion of rental income, the government said it would only grant such doubled subsi- dies to people who present cop- ies of their rental agreements. The government is also launching a pilot project for people willing to rent out their properties to people on social housing prices for a minimum of seven years. These landlords would see income tax on their rental income decrease to 5%. Pensioners want indexation system