Sociologist from Malta

Friday, August 20, 2010

Pensions, sustainability, social justice

Michael Briguglio

The Times, Friday, 20th August 2010

A few days ago, a delegation from Alternattiva Demokra¬tika – the Green party, comprising spokesman Yvonne Arqueros Ebejer and myself, met the government’s pensions working group, headed by David Spiteri Gingell, to discuss the future of Malta’s pension system.

I must say that we agreed with most – though not all – proposals put forward by Mr Spiteri Gingell, which aim for a balance between social justice, financial sustainability and long-term vision.

It is clear that Malta’s pension system cannot remain as it is. Otherwise, given the demographic reality of an ageing population, there will simply not be enough funds to sustain Malta’s pensions in the future as the ratio between workers and pensions shall keep narrowing.

Besides, due to cost-of-living increases, the value of pensions will keep declining, thus probably resulting in more poverty among pensioners. In short, keeping the present pensions system is not an option because this will ultimately lead to financial collapse and to poorer pensioners.

As a Green party, AD believes in a socially just and economically sustainable pensions system which matches rights with responsibilities and which takes long-term interests into consideration. Having a universal pension for all – which is as equal as possible – is thus essential. This does not hinder the people’s right to invest in private pension schemes on a voluntary basis.

In the prevailing scenario, the statutory state pension must be set at a rate that reflects the cost of living and expectations for a decent standard of living. Malta’s pensions policy should be inclusive of different types of families including married couples, cohabitating individuals, single parents, same-sex couples and single persons.

As a responsible party, AD agrees with the addition of a second pillar to the first pillar (the first pillar is the system where current workers pay for current pensions through national insurance). Thus, the financial sustainability of the pensions system will not be jeopardised as people will be saving an extra amount of money that will be used solely for pension purposes and will not be used by the government for other reasons. The second pillar should, however, be introduced in a responsible manner, thus avoiding shocks in people’s quality of life. In all cases, the state should have the ultimate say in the financing of the pensions system. This should be coupled with civil society and professional involvement in the policy aspect and management of the system.

On the other hand, the requirement that one would have to have worked 40 years to be entitled to contributory pensions is definitely not agreeable.

This is especially so in this day and age of precarious employment, individual¬isation of life¬styles and employment as well as other realities such as having people moving in and out of the labour force due to factors such as unemployment, care work and parenthood.

Hence, irrespective of the number of years worked, one should be guaranteed the right to a decent pension. In particular, low- and middle-income earners should be guaranteed a decent quality of life in their later years.

One should also note that Malta’s reformed pension system does not solve problems regarding inequalities among pensioners, whereby pensions are based on income received during one’s life course. Such a system is rigid and inflexible, resulting in further inequalities for people with non-traditional working patterns such as carers and part-time workers. Women, in particular, find it difficult to balance contributory requirements with the competing demands of family life, childbearing and insecure, part-time work.

On the other hand, however, it should be made clear that Malta’s labour force should increase in order to guarantee sustainable pensions. In particular, Malta’s low participation rates of females, ageing workers and immigrants is of concern. Malta’s social policy should be reformed accordingly. For example, it should encourage increased participation of females by having more family-friendly social policies. Increased involvement of men in caring roles is also of utmost importance.

With regard to retirement age, all workers should be eligible for a state pension at the age of 65 years without losing their right to remain part of the workforce and without losing pensions should they opt to keep working. At the same time, nobody should be forced to work beyond the age of 65 years. Besides, initiative should be encouraged rather than stifled with bureaucratic hurdles.

Given the long-term implications of a sustainable pensions policy, education plays an important role. It would therefore be positive to include education on pensions and ageing to the younger generation, particularly given that we are living in a here-and-now consumerist society.

One therefore hopes that the future of Malta’s pensions system is ensured through responsible measures. Long-term planning should be prioritised over the usual cheap populist planning system which lasts until the subsequent election and which only postpones problems. AD’s position – in favour of sustainability and social justice – is clear in this regard.

In the meantime, may I express my condolences to the de Marco family following the passing away of President Emeritus Guido de Marco. Malta has lost a true gentleman, a true visionary and an exemplary statesman who never shied away from speaking for peace, justice, respect and democracy.,
The author is chairman of Alternattiva Demokratika – the Green party.

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