The right approach is to enhance existing incentives to encourage people to postpone retirement rather than introducing measures that make it easier for early exits, the permanent secretary at the Ministry for Social Policy and Children’s Rights and chairperson of the Pensions Strategy Group, Mark Musù, writes today.

He was replying to articles which were published in The Malta Independent over the past weeks, in which constituted bodies argued that the present system should be changed.

Employers and unions told this media house that they both want to see people aged between 61 and 64 allowed to remain active in the labour market while still receiving a pension or at least part of it. As things stand now, they can’t.

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, which varies according to the year of birth.

A study that was conducted last year had suggested that the government reviews its position. In comments to The Malta Independent on Sunday, the Malta Employers Association (MEA) said it proposed 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. This measure would be cost-effective as it would be offset by the increased productivity gained from retaining more people in employment. Moreover, having more retired individuals in the workforce would reduce Malta’s dependency on foreign employees, the MEA said.

In similar vein, the Malta Chamber of Commerce had said that the fact that those who opt for early retirement are banned from undertaking any form of active legal employment as an employee or self-employed person has many adverse impacts. “It is contrary to the EU and government’s declared policy of institutionalising active ageing. It prevents employers from legally retaining or recruiting from a pool of skilled and experienced senior citizens that are immediately available in the labour market. It 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,” the Chamber said.

The GWU had argued that this “all or nothing approach” to early retirement should be replaced by a flexi-employment approach, allowing individuals to balance their need to reduce their working hours while remaining active in the labour market.

The UHM-Voice of the Workers had said that should there be employees wanting to remain in employment beyond retirement age, they should be allowed to do so without losing their pension. 

But the government has other thoughts.

In his article, Musù writes that “removing the limit to work when availing of early retirement could reverse the positive trends and the gains achieved in these last years. We have to be very careful as we would be messing with something that is working.

“It is crucial,” he added, “that stakeholders come together to come up with better ways of encouraging the quarter who are retiring early to instead continue working. This could be through offering modern and more flexible forms of employment and extending family-friendly measures to cover those with moderate health issues or care responsibilities, for instance.”

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