Issue link: https://maltatoday.uberflip.com/i/960495
maltatoday SUNDAY 1 APRIL 2018 Interview 17 With the pensions time-bomb ticking away in the background, Maltese pensioners are beginning to wonder whether they'll live to ever see the fulfilment of the long-promised pension reform. LOUIS CILIA and CARMEL MALLIA – president and vice-president of the National Association of Pensions – argue that 2027 is too long to wait for pening. Today, you only get the Cost of Living Adjustment. The question I would ask at this stage is, what measures should be put in place to address the erosion of pensioners' purchasing power as they grow older? I can speak from experience here. I retired 20 years ago, with a 600 euro treasury pen- sion. Five years later, I still felt I was doing well. But when you hit 70... 75... 80... those 600 euro no longer cover your expenses. LC: Our point is that the current system does not take into consid- eration that personal expenditure tends to increase with age. From 60 to 65, things remain generally the same... CM [nodding]... No problem... LC... From 65 to 70, problems might start setting in. You'll need pills for this or that... CM... In and out of the phar- macy... LC: And those expenses tend to keep going up. To give you an ex- ample: a pensioner might end up needing 130 euro a month for a certain type of medication. Others might need a lot more. All out of a pension of 170 euro a week. In my case, I feel advantaged because I still feel in good health. But I'm still at the second phase – 74 going on 75. And I feel that a big chunk of Malta's pensioners are simply not coping. It's true that some might benefit from free medication pro- vided by the State... but the truth is that nearly everyone sooner or later is confronted by something that is not catered for in the list of free medicines. Separately, the NPA resolution also urges a 'solution' to the Service Pensions issue. My understanding is that the complaint is about people who benefit from a British Service Pension, and who have the equivalent amount deducted from their Maltese pensions... and also that we have been talking about it for years, if not decades. Is it possible that no satisfactory solution has ever been reached? LC: The service pensions: the issue has been dragging along for- ever... since the end of British co- lonial rule, in fact. So long, that most of the affected people have since passed away. But there are still their heirs to consider... and I suspect that that is why both this government, and its predecessor, have been afraid of tackling the is- sue. They're worried they will have to fork out a lot of money in back- dated payments... CM: One aspect of this issue that all newspapers are getting wrong is that a 'service pension' is only ever associated with the British military service. This is not the case at all. A service pension is just a con- tract between an employer and an employee: upon retirement the employee would be given a pen- sion based on the service they had rendered. In this sense, it is similar to what we now call a 'second pillar pension'. In Malta, there are a lot of people who qualify for a service pension: not just those who were employed in the British armed forces. Yet those are the only ones who are ever cited. This is wrong on two counts: one, there are (or were) Maltese service employees in other areas of the British ad- ministration, not just the military. Two, 'service pension' also applies to Malta's own treasury pension... this is in fact the largest contingent of service pensioners by far. This is the aspect that needs to be talked about most, yet nobody ever men- tions it. All those who entered the public service until December 31, 1978 are entitled to a service pen- sion from the treasury. Those who worked for 30 years are entitled to a full pension, paid from the treasury. Yet on retirement, these people are given a two-thirds pension, based on the salary at retirement age: if, for argument's sake, someone earned 24,000 when he reached re- tirement age, his pension would be 18,000... Isn't that true for everyone, though? Unless, of course, you count Parliamentarians... who recently voted to extend a pension to MPs who served just over one term... CM: That was one of the reasons so many of our members were in- censed ['ferrocjaw']: because it had just come out, in black on white, that Parliamentarians agreed to entitle themselves a pension after just five years (one legislature)... while others are still fighting for what they are owed after 20 years or more. And don't forget that, unlike everyone else, those pensions are not capped. An MP's salary increas- es on an annual basis. Not so the rest of us. People like myself, who retired 20 years ago... if I received 600 euro when I retired, I still re- ceive 600 euro 20 years later. That's one of the injustices: theirs goes up each year; ours stays the same forever. But it's not the only one. When I die, my pension dies with me. When they die, their widows carry on receiving their pensions... But to be honest, the only really important thing is that we address the more serious problems. What we are saying – so that I'm not mis- understood – is that, fine, let them increase their salary or pensions as much as they like. But you can't also keep ignoring the bigger issue... LC: It's an issue that has caused a lot of internal uproar among our members... but it's important to stress that it is the injustice peo- ple are upset about, not the actual pension received by MPs. The bot- tom line is that the original spirit of the Pensions Act has been diluted. The idea was to provide a safety net for everyone. It's ultimately only a question of justice. of holes Louis Cilia Carmel Mallia