At different junctures over the years, pensioners have received the short end of the stick. Although a minimal number of classes of pensioners were granted a revision, however piteous, in the pension they receive.
In 1979, the introduction of the two-thirds earnings-related pension was a major break-through; however, the ceiling was capped at 2/3 of Lm6,750 (€15,723). From 2005 the maximum pensionable income started to increase with the COLA.
Here are the numbers relating to the 2015 contributory pensions weekly maximum rates:
- Two-Thirds Pension €228.74
- Survivors Pension €190.96
- Married persons in receipt of a National Minimum Pension €138.03
- Single persons in receipt of a National Minimum Pension €118.69
- Married persons in receipt of an Invalidity Pension €138.03
- Single persons in receipt of an Invalidity Pension €118.69.
The pensions’ reform is not a process in isolation. Like the rest of society, pensioners are taking note of the blatant cases of cash handouts being granted to the privileged few, while their justified claims are ignored.
Yes, pensioners can claim that this is a case of two weights and two measures.
Sustainability and adequacy are well-played trump cards, cited in all the commissioned reports on pensions’ reform. The terms of reference of such reports are tight and subject to actuaries which all lead to the same result. Sustainability and adequacy are mostly used to hide the lack of political will to change.
The pensioners’ pension has been on the national agenda for years. Changes have been made, some of significance others superficial, but evidently more needs to be done as more and more pensioners are slipping into poverty.
The recently published report ‘Strengthening the Pensions System’ makes twenty-seven recommendations. However, what is missing from the recommendations is a proposal for a fair deal to pensioners.
This latest report once again indicates that collected monies and demographic changes walk in opposite directions and do not add up. Indeed, arithmetical calculations and projections support the inadequacy and unsustainability notion. Precisely for this reason, every effort should be made to start thinking differently to avoid future generations from falling into poverty.
It is pertinent to note that from the same public purse where national insurance contributions are put into, other services are supported. In addition to pensions, the national insurance contributions support invalidity, injury at the place of work, children’s allowance, and various services under the health scheme. Enough schemes and pensions to drain the pot dry.
A quick look at different age cohorts before pensionable age gives an indication of where their salary goes.
Those in the younger generation would have either entered the labour market or are perusing studies in tertiary education. Most in the mid-twenties to the early thirties would be looking for a partner and a house. They commit to pay a hefty monthly bank-loan, which will eat most of their joint monthly income. Then, generally, come children and the frantic running for all sorts of activities after school hours. This would put further pressures on a family’s monthly income.
After forty, a portion would be moving into supervisory, executive and senior posts with good salaries. The rest of the work-force would have maximised on their employment potential and opportunities. By this time, hopefully, the bank-loans are either fully serviced or about to be. But by this time, children would be getting into young adulthood and seeking financial assistance from the parents for a wide range of things. Many would oblige. In most cases, most would be hard-pressed to save for what appears to be in the distant future. Many are rudely awakened once they find that they cannot sustain their standard of living on a pension.
In this regard I float some viewpoints.
A national pension fund should be set-up clearly identifying the beneficiaries and what pensions are paid from this fund. Other services and benefits should be funded from taxation and not from national insurance contributions.
The fund should be administered by the Central Bank and monitored by representatives of the social partners. This should ensure that governments do not play Father Christmas.
The fund should be invested in a wide, secured portfolio.
Government should be the guarantor of the fund.
Apart from national insurance contributions, the pensions’ fund should also receive a percentage from other sources of income generated from tax collected, such as that from lucrative financial institutions.
A percentage from proceeds of privatisations should go into the fund.
There may be other streams of income to support the fund. The Individual Investors Programme may be one of them, unless this has already been earmarked to cushion the selected few.
Ultimately the guiding principle of the reform should be to ensure a decent standard of living for all, not scoring short-lived political goals.
[email protected]