A number of unions and employer associations have raised an issue with the current early retirement system.

A person who reaches 61 years of age at present can opt for an earlier pension entitlement, provided that they will not remain in any gainful occupation and have paid the stipulated contributions between age 18 and date of retirement. They would then be allowed to re-enter employment should they wish once they reach the normal retirement age.

But one must question, given the present situation and the need for workers as well as certain skills, does this ban on employment for such people make sense? It is understandable that such a measure was set up to dissuade people from early pension entitlement, but at the same time, can’t a better solution be found.

The Malta Chamber of Commerce and the General Workers Union had, together, drafted a proposal. David Spiteri Gingell, a former chairperson and member of the Pensions Strategy who was involved in the drawing up of the document, had said that the solution recommended was to create an early retirement pathway for persons aged 61 to 64, during which period they receive a reduced pension (which would increase until the full pension is provided at 65) and continue to be actively engaged in the labour market. The GWU and Chamber are still in favour.

The Malta Employers’ Association’s proposal is slightly different, saying that those who work beyond the age of 61 and have already paid full national insurance contributions should still receive 50% of their pension until they reach the retirement age

The ‘ban’ on people in early retirement from working until they reach the normal retirement age, was intended to discourage people from opting for an early retirement, the Malta Chamber of Commerce says. “It was subsequently complemented by a top-up incentive mechanism for employees who remain in employment until 65 years of age, which increases the state pension income by up to 23%. These measures were successful,” it said,  as “80% of persons who were born in 1951 remained in full-time employment after they reached age 61 and nearly three-quarters of the cohort born in 1957 was still working after that age.”

But, the Chamber highlights the ban also has adverse effects. “It is contrary to the EU and government’s declared policy of institutionalising active ageing,” it said, adding that it also prevents employers from legally retaining or recruiting from a pool of skilled and experienced senior citizens, and prevents many experienced and skilled senior citizens from working on a flexitime basis, “which would allow them to balance work with the need for more personal time due to health care issues, burnout, and informal care responsibilities such as helping with grandchildren.”

And here the Chamber has a point. Should there be such a ban? As seen above, some unions and employer organisations think there should be a different way forward.

There are of course other points regarding the pension system which were raised. For example, is the pension today enough to cope with the rising cost of living, even with the government top-ups? The UHM – Voice of the Workers says that pensions are no longer adequate to guarantee a decent living.