It seems that consensus on the national way forward as regards the ‘pensions time-bomb’ as it is fondly dubbed by analysts worldwide, is still a far cry considering government’s intention to introduce the Third Pillar Pension’s scheme in the up-coming budget.

The Malta Independent can report that not all MCESD members are happy with the introduction of a scheme which could favor those who can afford a private pension but leave other white collar and skilled workers with nothing.

Leading the pack against a short term solution by introducing a private pensions scheme without accounting those workers who cannot afford one, is the Union Haddiema Maqghudin (UHM), who along with the CMTU is arguing that a third pillar scheme will only accommodate those who can afford it.

“Only two out of 10 workers will be able to go for third pillar pension,” claims Josef Vella UHM’s Secretary General. “In principle we are not against this scheme but would prefer to see the government introducing the second and third pillars in one go.” 

The second pillar pension is a scheme which runs in parallel to the existing pension mechanism but which requires both workers and employers to carry the burden.  The present mechanism has been described as a ‘time-bomb waiting to explode’ with credit rating agencies and the European Commission pointing out that Malta needs to act fast on this growing problem. As things stand, today’s workers contribute towards pensions paid up now, however, with an aging population like ours there will not be enough contributions to sustain the system in 30 years time.  The third pillar schemes will alleviate a portion of the burden but cannot contribute much towards the solution. Malta has already increased the retirement age to combat the problem, but as the EC pointed out, too little too late has been done to solve the problem.

Ironically, it seems that those in favor of the introduction of the third pillar scheme are the employer’s bodies within the MCESD, while the GWU has hardly uttered a word of concern on the matter since March.

The UHM, which will be presenting its budget proposals at the end of the week, will be proposing to Government a two-way strategy. “Government ought to split the issue in two categories,” says Mr Vella. “It should create a working group on the problems facing today’s pensioners, while setting up a tandem group to tackle the long term effect on tomorrow’s pensioners.”