Pensioners' alliance slams reform report

Going by the EU's standard that whoever earns less than 60 per cent of the average wage is below the poverty line, then the final report on pensions reform was proposing that people become automatically poor on reaching pensionable age, the president of the Alliance of Pensioners' Organisations (APO), Albert Tabone, argued passionately yesterday.

The alliance, a conglomerate of seven pensioners' associations, emphasised that the point they are making will not apply to them as the reform will affect the younger generations.

"We are not fighting our own cause here, we are just taking the time to look into what the government is proposing out of civic responsibility," a member told The Times.

The logic behind Mr Tabone's argument is simple: the working group's report, which was tabled in Parliament by the Prime Minister on Monday, proposes a solution which in 2050 would give workers 38.6 per cent of what they earn in pensions. In real terms this means that by the EU's own poverty line benchmark, most pensioners will most likely end up living below the poverty line.

The World Bank has established a target of 40 per cent for the same period and although the calculated pension as projected by the working group falls short of this target by only 1.4 per cent, even the World's Bank target is not enough for the APO.

For example, a salary of Lm7,000 yearly, at a rate of 38.6 per cent, would translate into a pension of Lm2,702 yearly. Moreover, the wage, as proposed in the working group's report, would be arrived at through an average of the best 10 years in the last 20 years of one's career, replacing the current best three years out of last 10 years formula.

This may work out to a figure significantly less than what one earns before becoming a pensioner, Mr Tabone pointed out. Besides, the pension rate should be at least 70 per cent, he added.

Another point mentioned was in connection with what was described as "an indication" that the pension system may change from one which is "defined benefit", where the contributor knows exactly what he or she will be receiving as a pension, to a "defined contributions system" which basically means that only what will be contributed is fixed. The revenue coming from the pension will depend on the market at the time the person goes on a pension.

Such systems could make sense in countries where there are occupational pensions but disastrous in Malta where such pensions are generally absent, Mr Tabone insisted.

There was next to no consultation with the alliance, he said, adding that when the complaint was raised with the Prime Minister they were told that the government would be publishing the final report and then wait for feedback.

"Now Dr Gonzi in the budget said that enough has been said about the issue and that it is time to decide. Well to us this is unacceptable behaviour on the part of the government.

"We will not be giving any feedback before the government makes clear where it stands. We just cannot keep accepting a situation where technicians prepare reports, politicians stay on the sidelines and then suddenly impose a decision with massive consequences," Mr Tabone insisted.

"It is easy for ministers to say that people have to make sacrifices but what are they doing to lead by example?" Will the reforms proposed apply to the parliamentarians who already have a privileged pensions scheme, he asked.

Over the past week The Times has contacted the government and various constituted bodies for their reactions to the final report but their reply was more or less unanimous: they were still going through the voluminous report.