The Union Ħaddiema Magħqudin (UĦM) will continue to insist on the introduction of second pillar pensions, union secretary general Josef Vella insisted during an interview on Voice of the Workers Weekly.
He was reacting to the government’s strategy on pensions which was announced recently.
Mr Vella said that citizens are already working so that a portion of our taxes goes towards Maltese and Gozitan workers who work within the EU. These workers have a second pillar pension which is guaranteed and on average is equivalent to €55,000 annually.
He questioned why Malta is the only country in the EU which has not introduced second pillar pensions while adding that the government should at least come up with a plan aiming to reach a productivity rate which in turn can guarantee second pillar pensions.
On the government’s strategy, he said that this is not a reform but an exercise as was requested by the EU.
He said that this exercise is ensuring financial sustainability but is not pushing for adequate pensions.
“It is of great importance for us to acknowledge that the country should not only have the cash to fund pensions but that pensioners receive enough money to live a quality life,” Mr Vella continued.
The strategy
The strategy rules out an increase in the statutory retirement age from the present 65 at this stage, and similarly rules out increasing social security contributions, presently set at 10% for both employee and employer, and what are known as compulsory second-pillar pensions, which are supplementary pensions paid by employers and employees.
According to the Pensions Strategy Group, the strategy was based on five basic principles, including that there should be a clear definition of the aims of the pension system, and that there should be a strong employment policy to help sustain the system.
The group believes that state pensions should be a solid source of income for pensioners, but should not be the only one. It also sought to strike a just balance between the amount of time in which contributions are paid and the amount of time benefits are received, and to reform the system in such a way that it would be capable to evolve to address future developments.
At present, those born on 1962 or later are required to make 40 years of social security contributions to be entitled to a full pension, but the reform proposes that those born on 1965 or later should contribute another year.
However, the proposed reforms would also increase the contributions credited to those who stop working to take care of their children, up to 5 years for their first child, 4 years for their second and 3 years for their third.
On its part, the Nationalist Party has urged the government to start the debate on second pillar pensions after Prime Minister Joseph Muscat had ruled out their introduction.