Young people seek a hearing of their views on pensions reform

As unions, employers and the government seek a consensus on pensions reform, young people - who will be most affected by any changes - are the least consulted on the matter.

This was the main concern of National Youth Council (KNZ) president Jean Paul de Lucca and youth council vice-president Daniela Debono, who said that any scenario in which young people were made to carry the greatest burden was unfair and unacceptable.

In a document entitled Pension Reform Policy, published after six months of consultation with youth organisations, the National Youth Council said that today's young people "are those who will be most affected by the decisions that are about to be taken and by the structural changes that will accompany them. There is, therefore, a moral obligation to consider the views we express".

The former chairman of the Malta Council for Economic and Social Development, Edward Scicluna, made similar claims last Friday when he called for the inclusion of young people in the ongoing discussion on pensions reform, as policy laid down today would affect mostly future not present pensioners.

Ms Debono said youths were to be considered a vulnerable group because they were in the lower income bracket. "Having just entered the labour market, most would be setting up a family and an independent household, possibly buying or renting their first dwelling in a market where renting and purchasing property is becoming increasingly difficult."

The KNZ document pointed out that while the ratio of working age population to persons aged 62 would change from 4:1 to 2.3:1 by 2025 according to the current Pay-As-You-Go system, there was a fall in household savings from 14 per cent in the early 1990s to 1.4 per cent in 2001.

Ms Debono explained that the KNZ has been insisting that the discussion on pensions reform should include issues such as health, housing and education. "It is useless to achieve consensus on one area and dissatisfaction in another, so all these aspects should be taken into consideration when discussions are taking place."

Among the guiding principles, the KNZ document lists solidarity and social justice, efficiency and equity, subsidiarity, social acceptability, and greater accountability.

"Most youth groups stressed the importance of accountability. Young people expressed a wish to know what is happening with the money that is meant for pensions," Ms Debono explained.

Unlike youth organisations in other countries, Maltese youths were aware that, due to the closely-knit nature of society in Malta, any reform would affect close members of their family.

The National Youth Council said that in the current economic scenario, the impact of the liberalisation of the market and the removal of protective levies as a result of EU accession, for example, should also be taken into consideration.

Any changes to compulsory contributions should be planned, announced beforehand and introduced gradually, the KNZ said.

With regard to private pension schemes, the KNZ said compulsory pension schemes should suffice and private pension schemes should remain strictly optional.

Moreover, companies offering pension schemes should be thoroughly regulated so that people do not risk losing the money they would have saved.

Two other principles, which the youth council said should be dealt with, were education and financial knowledge. Information centres which organised seminars on the changes enacted and also about the firms in the pension-fund markets must be set up.

Finally, a culture of savings must be re-instilled through an exemplary use of public resources.

Referring to the World Bank report on Maltese pensions that stirred up a hornet's nest last week, Mr De Lucca said that though the report was indeed an eye-opener which gave new insights to the problems, the social partners were still expecting an impact assessment that portrayed what the social implications of the implemented measures would be.

The KNZ document stressed that the government should declare the targeted financial sustainability levels it aimed to achieve. "There has been no declaration of the standard of living that society wants to enable pensioners to achieve."

When consensus was reached on these objectives, the government should present a number of possible combinations with which these objectives could be achieved, the document said.

"What would the rate of youth unemployment be when the retirement age is raised? Have the effects of the European financial integration been taken into consideration, at all? We look forward to the issuing of impact assessments as the World Bank report was not an impact assessment," said Mr De Lucca.

The KNZ and the National Association of Pensioners had originally been participating in the Welfare Reform Commission but nothing was resolved in that forum. Consequently, the KNZ was invited to attend meetings of the MCESD whenever pensions reform was on the agenda, such as last year's marathon meeting on the subject in Gozo.

"We think consultation should not only take place before a tangible proposal is developed but also after such proposal is presented for discussion. That is why we are calling on the government to take the lead in the framework of discussion," the KNZ representatives said.

The National Youth Council said those who wanted a copy of the pension reform document should send an email on knz@maltanet.net or call on 2124 5375.