The Malta Independent 25 February 2020, Tuesday

TMID Editorial: Pensions and the economy - Time to think long-term

Tuesday, 11 February 2020, 09:30 Last update: about 13 days ago

A very worrying statistic emerged on Eurostat recently, regarding the pension gap in Malta and other EU Member States.

The gender pension gap shows the percentage by which women’s average pension income is higher or lower compared with men. Pension income includes old age benefits, survivors’ benefits as well as regular pensions from individual private plans. Although women received lower pensions in all EU Member States in 2018, the extent of the gap varies widely. The largest difference was observed in Luxembourg, where women aged over 65 received 43% less pension than men. Luxembourg was closely followed by Malta (42%).

While Malta having the second highest pension gap in the EU is a worrying situation, the news did not end there. The statistics showed that the gender pension gap increased in seven EU Member States since 2010. The most significant increase was observed in Malta (from 22% in 2010 to 42% in 2018.)

The gap has actually been increasing over the years, rather than decreasing which creates a worrying situation.

The government has been speaking for years about tackling poverty and social exclusion, and has also been pushing for more women to enter the workplace. This of course will help in the long-term, but currently there is quite a gap between male and female pensioners in terms of earnings. Now this might not be a surprise given that in the past women did not enter the workplace as much as they do nowadays, however this does raise concerns of reliance of women on their male partners.

The statistics published showed that In the majority of EU Member States, the proportion of pensioners aged over 65 who are deemed to be at risk of poverty lies between 10% and 30%. The four countries with an at-risk-of-poverty rate above 30% in 2018 were Estonia (54%), Latvia (50%), Lithuania (41%) and Bulgaria (30%). Malta, in 2018, stood at 23%. What is worrying however, is that in Malta the trend was actually rising. As an example, 18.3% of these people were at risk of poverty in 2015, thus it is quite a rise for a few years.

The government has taken measures to try and help pensioners, such as by increasing pensions and other means, but more needs to be done.

Malta has a large number of elderly people, who have worked hard throughout their lives. It is not right that a proportion of these people cannot live decently in their golden years.

Of course Malta does have another problem, the sustainability of our pensions. A proper plan needs to be put into place to ensure that pensioners are able to live decently though the pension they receive, but also to ensure that changes that should be made, be sustainable.

Now the influx of foreign workers has probably helped, and has indeed boosted the economy thus allowing for the government to take more measures to help pensioners, but has created other unsustainable issues, mainly in terms of infrastructure and rising house and rent prices.

As one can see each measure has a knock-on effect, and perhaps the time has come to develop a proper holistic strategy for the country.

If the economic plan remains to require a large number of foreign workers per year for example, then a proper infrastructure plan is required, and not just in terms of roads, but also in terms of sewage systems etc. A plan would be needed in terms of how much housing would be required, and how to try and ensure that the Maltese are not priced out of their ability to purchase or rent places to live and work.

The government needs to stop thinking short-term, and think long-term, not only in terms of bettering pensions, but also in terms of where it wants to take the Maltese economy, and what is needed to achieve that goal without causing other issues.

 

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