May I refer to the report of the debate on the second reading of the bill amending the Social Security Act (TMID 8 July). Minister Cristina is quoted as saying “Once and for all I want to make it clear: today’s pensions and pensioners will not be affected by the reforms”.
Technically this statement is correct. Effectively, however, an increasing number of pensioners will find themselves worse-off. Permit me to explain why.
Today there are two categories of contributory social security pensioners. A few thousands, the current salaries of whose posts exceed the Maximum Pensionable Income, now receive, and will continue to receive, two-thirds of the flat rate cost-of-living (COLA) increase based on inflation at the minimum wage level. In its wisdom, the government has decided that as this flat increase is accepted as an arrangement, then the increase is sufficient.
This line of argument conveniently overlooks the fact that employees who get the flat COLA increase also get hefty salary increases in consequence of collective agreements. So what the middle and higher grades lose on the swings is more than made up on the roundabouts.
Not so pensioners in the category mentioned. After receiving a pension which, because of the MPI mechanism, may be as low as 40 per cent of retiring salary, they find its value being eroded at a fast pace because it is only increased by two-thirds of the COLA increase calculated at the rate of inflation on the minimum wage. So, yes, the minister is right, this category will not be affected. The fact that they will soon find themselves unable to make both ends meet is obviously not a consideration for the minister and her colleagues.
The second category of pensioners is that with salaries now still below the Maximum Pensionable Income ceiling. As the minister rightly said, pensioners in this category would continue to receive two-thirds of the flat rate COLA increase and continue to have their pensions reassessed with every change in salary of the post on which the pension was calculated.
What the minister failed to say, however, was that this situation would only last until the current pay of the post from which they retired remains below the MPI ceiling. Then they will be treated exactly as those in category one. For thousands this is not so far away.
Had we, as common or garden pensioners, had the same pension revision arrangements of former ministers (total indexation to salary changes without any ceiling) we really would have no cause to grumble or alarm ourselves. As things are, I do not think that the minister’s technically correct statements will enable me to maintain a decent standard of life.
Albert J. Tabone
St Julian’s