 29 Nov. - 5 Dec. 2000 |
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Pension problems still some way off being solved
There is no guarantee that the National Commission set up to report on Malta’s pension problem will have completed its work by the end of the year 2000, despite Finance minister John Dalli’s hope that this will be the case. In his Budget speech last week, Mr Dalli expressed his disappointment that the National Commission, which was set up to make recommendations about social reforms, had not yet submitted its final report to the government. He added that the Commission, which has also been rapped over the knuckles for its tardiness by Social Policy minister, Lawrence Gonzi, was expected to complete its work by the end of the year. But when contacted yesterday, the head of the Commission, Anthony Galdes, was doubtful about whether the work would be finished on target. "If it was just down to me, then yes, it would be ready by the end of the year, but there is a technical team of professional officers in the public sector who have to give their input and they have other work to do first," he said. Mr Galdes told The Business Times that the team had compiled the necessary data for use in the World Bank pensions model, which has been adapted to meet the situation in Malta. "Their projections over time of costs and income arising from the current social security system, based on that data, have been recently made available to the Commission," he added. Mr Galdes admitted that there were also other considerations relating to the complexity of social security reform that affected the progress of the Commission’s work. "More work also needs to be done on simulations of possible reform scenarios as may be required by the Commission," he said. Mr Dalli had spoken in some detail during last year’s Budget about the problems that arose out of the re-assessment system that had been introduced in the pensions scheme in 1979. He referred to the speech last week, mentioning how the system took control completely out of the government’s hands in the increases in pensions that would have to be paid on decisions made by unions and employers. Mr Dalli said the system had created a number of injustices, as the increases in pensions were not related at all to considerations of social justice. Referring to his speech the previous year, the Finance minister said: "I then stated that the National Commission that we had set up to make recommendations about social reforms had to study in detail and in haste those same consequences so that we would be in a better position to establish without delay a system that would provide for everyone in a more equitable manner. Unfortunately, the Commission has not yet submitted its final report to Government. It is expected that it would do so by the end of the year." Mr Dalli recounted how studies were made on the effect of the increases which the new salary structure that would come into effect on 1 January next year would have on the system of contributory pensions of Social Security. "These studies showed that in the present circumstances, this revision would create big anomalies in the whole system," he said. The Finance minister said that from the current total of 54,500 pensioners, 15,000 pensioners are former government employees, 4,500 pensioners are ex-services or former private sector employees who are now analogued with the public structure, 6,200 are pensioners that retired from public or parastatal enterprises, 12,600 are pensioners that were self-employed and 16,100 have retired from private companies. "As a result of the revised wages and salaries structure, there will be a revision of the pension of 15,000 former government employees and 4,500 pensioners who are analogued with the public sector," he said. "From these, 19,500 pensioners, 5,100 will not receive any increase, 2,400 will have an increase of Lm100 per annum, 3,000 will have an increase of between of Lm100 and Lm200 per annum, another 3,000 will have an increase between Lm200 and Lm300 per annum and another 6,000 will have increases ranging between Lm300 and Lm800 per annum." Mr Dalli explained that these increases will amount to Lm5.5 million. "From these, Lm3.3 million, or 60 per cent, will be distributed amongst the last mentioned 6,000 pensioners who make up 31 per cent of the total pensioners covered by this revision," he said. "This means that the largest portion will go towards the few. Surely the distribution of the common wealth, more so at a time when the resources are so scarce, should be better applied?" The Finance minister pointed out that when an unmanageable expenditure takes up this level of resources, the possibility of taking up other measures that could be of great benefit to those who really need them cannot be realised. "During the coming days, the government needs to meet with the social partners sitting on the Commission for Welfare Reform to see with them how the funds that will be spent in this way can be utilised in a more equitable manner," he concluded. | |||||||
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The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
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