Penalised for carrying on working after retirement
Ex-bank worker gets half the pension he would have got to stay home
John Zammit, 65, rues the day 14 years ago that he decided to continue working soon after retiring early from the bank where he was employed.
Little did Mr Zammit know it would have paid him more to stay at home after taking up the HSBC early retirement scheme offer at the age of 51.
Mr Zammit’s decision to do self-employed work came back to haunt him four years ago when, at 61, he started receiving his pension.
“My decision to work for 10 years after early retirement penalised me because the pension I receive today is almost half what it would have been had I decided to stay home and do nothing,” he said.
He believes this anomaly in the system is unjust and has been trying to seek redress for the past six years.
His hope now lies in the impending reform which the pensions working group is expected to unveil in the coming days.
In cases like mine hard work was penalised rather than encouraged
Mr Zammit’s retirement pension was calculated on the basis that he was a self-employed individual, worked out as an average of his income in the last 10 years. It was actually worked out on nine years, because he was still employed halfway through the first year.
This gave Mr Zammit a pension of about €525 per month, since his income was not at the high end of the scale. Had Mr Zammit stopped working at 51 on early retirement from the bank, his pension at 61 would have been almost double.
“I had 32 years in national insurance contributions before retiring from the bank, which was more than enough, but they were ignored.
“This is an injustice,” he said, adding that the anomaly had also negatively impacted people who accepted early retirement at Air Malta in 2008.
Hard work penalised Mr Zammit, which was acknowledged by the senior civil servants who reviewed his case. He produces reams of e-mail exchanges over the years with senior government officials, including Prime Minister Joseph Muscat and his predecessor, Lawrence Gonzi.
In the latest exchanges, Mr Zammit was promised that anomalies like his would be considered in the upcoming reform.
Mr Zammit said retirees in his situation should have their pension calculated over all the years for which they paid NI contributions. “After all, this is how pensions will be calculated in 2026 and I hope justice will finally be served, because in cases like mine hard work was penalised rather than encouraged.”
The Prime Minister has promised “some interesting proposals” by the pensions’ reform working group, hinting that the private sector would be included.
Dr Muscat has drawn two red lines for the reform: NI contributions will not increase, and the retirement age will not go up from the current 65.
kurt.sansone@timesofmalta.com