The clause amending the law to increase the retirement age from 61 to 65 was approved by Parliament following a vote at the end of yesterday’s morning session.
While the retirement age will still be 61 for those born on or before 31 December 1951, the bill allows for the retirement age to increase in stages for those born between 1952 and 1962 or in later years.
The retirement age will be 62 for those born between 1952 and 1955, 63 for those born between 1956 and 1958, 64 for those born between 1959 and 1961 and 65 for those born from 1962 onwards. The retirement age for women born on or before 31 December 1951 will still be 60.
Although this was only the second reading of the pensions’ reform clause, the third reading only requires Parliament to cast its final vote on the law as amended during the second reading.
The vote was approved with 24 votes in favour and 18 against.
Other clauses approved by the House yesterday morning include the introduction of an incentive in the form of accredited contributions for parents who choose to stay away from work until their children are six years old, or 10 years old if they are certified to be suffering from a severe disability.
The incentive was announced by Family and Social Solidarity Minister Dolores Cristina by means of an amendment to the third clause of the bill revising Article 16 of the Social Security Act.
This amendment states that any mother or father born on or after 1 January 1962 may benefit from accredited contributions if they stay away from work during child-rearing years.
Minister Cristina said this amendment introduces an important concept. “This is for parents – and there is no distinction between parents, except those who have children with a severe disability – who choose not to work and stay at home with their children during their early years,” she said.
By means of the amendment, many more people can benefit from the credits from which some people already benefit, said Mrs Cristina. She explained that parents under 44 years of age with children under the age of six will have credits for two years for every child.
With regard to parents who have children with a severe disability, the child-rearing years will be extended. One of the parents may stay at home with the child until he or she is 10 years old and the credits will increase to four years.
“The most important thing is that before parents reach retirement age, they will have to work for a minimum number of years equivalent to the credits obtained,” said Mrs Cristina.
Labour’s main spokesman for social protection Karl Chircop said this incentive is positive and the MLP document on work includes this concept.
He explained that the government will be increasing its revenue from the pensions’ reform, since the period of social security contributions will increase and the government will take longer to begin paying pensions.
As a result, it is good that the government will be returning some of this additional revenue to citizens in the form of, for example, accredited contributions for parents, said Dr Chircop.
Earlier on during yesterday morning’s discussion on the pensions’ reform, the Labour MP said the MLP did not agree that, as the government will gradually increase the capping to Lm6,000, high-earners will have a much higher increase than those in the low and middle income bands.
Dr Chircop said a reform in the pensions system is a very serious issue that will closely affect every citizen and he argued that the reform as proposed by the government is socially regressive and unjust because it will only help those in the higher-income bands.
He went on to speak about the invalidity pension and said that the legislation in this regard is too rigid and severe, as the invalidity pension is granted for a maximum of three years, so those with a long-term injury who will never be able to return to work, will have to re-apply for an extension of their invalidity pension.
In reply to Dr Chircop’s comment, Education and Employment Minister Louis Galea, as well as Minister Cristina, said the invalidity pension system is intended to avoid abuse as much as possible.
“We need to make sure that cases are genuine when granting social benefits,” said Dr Galea.
Minister Cristina said rampant abuse is unavoidable when the legislation is too liberal; on the other hand, such cases require sensitivity, common sense and logic, she said.
Dr Galea also replied to Dr Chircop’s comments that the pensions’ reform as proposed by the government is socially unjust.
He said that by means of the amendments, the number of pensioners falling above the maximum retirement age will be higher than the number of those who do not, and they will also pay less social security contributions.
He added that no one who is exempt from the reform will be negatively affected, while those who are not exempt will, in fact, benefit.
“So how can the Labour party say the reform is socially unjust?” he asked, adding that the government is also dealing with the way capping will take place so that today’s pensioners will not be negatively affected.