Liberties with the truth
Last August, APAN, the PN’s Association of Pensioners and Senior Citizens, held a seminar where it claimed that the government had to eliminate the anomaly under which those born before 1962 have different pension entitlements to those born after that date.
So you can imagine my surprise when, on April 9, I read the opinion piece authored by Joseph Zahra, the president of APAN, on ‘Labour’s myths on pensions’.
Zahra states that “those who, like me, were born before 1962 did not lose anything”. He continued: “On the contrary, to keep pace with a rising standard of living, the cap on pensions went up from €10,485 to €13,980, and cost-of-living increases were given in full as from January 1, 2008 instead of the previous two-thirds.”
Now that a Labour administration has undone the anomaly created by a Nationalist administration, the president of the association which had made this its crusade comes out to say that, in reality, there was no anomaly!
Not just that but, wonder of wonders, he came out against the same measure that his association had been pushing for – the equalisation of the maximum pension for those born before 1962 and those born after. In fact, he says that it is not fair that 10,000 pensioners are getting an increase and that this is the pinnacle of discrimination.
Leaving aside this hypocrisy and this contradictory statement, let me clarify some points.
The changes made in the last budget do not affect 10,000 pensioners but all pensioners. In the budget, we started to do away with the injustice created by the 2006 pension reform, headed by the then Nationalist government, that pensioners born before 1962 are only guaranteed the cost-of-living increase while those born after 1962 get an increase that must be at least 70% of the increase in the average wage and 30% of inflation.
This is a new right that will result in higher pensions to all pensioners whereas, before, only pensioners born after 1962 would get the larger increase.
Secondly, it is not true that we are increasing the pensions of just 10,000 pensioners. This year all pensioners got the largest increase ever granted.
What is correct is that some pensioners got more than the €15 rise per week. This includes, among others, widows, where we are gradually removing the injustice meted out previously that a widow only got five-sixths of her husband’s pension.
From 2008, those same pensioners started to get the full cost-of-living increase but in a way that created anomalies in their cost-of-living bonus, which we are addressing.
Moreover, we have also started the gradual process of increasing the maximum pension of those born before 1962, to equal that of those born after.
In the budget, we had estimated 10,000 would immediately benefit. In reality, the figure will surpass 23,000, since, with the revision in pensionable salaries due to a higher-than-normal inflation and with a laborious pension revision exercise which we carried out in these last years, more pensioners ended up on the maximum pension.
Zahra sought to imply that the prime minister’s pronouncements on pensions are related to my advice to workers to consider investing for their own future in private pensions. The Nationalist Party has come out all guns blazing against my advice.
I find this incredibly strange since the Nationalist Party’s main pension reform plank is that all workers should be forced to save money in a private pension. They deceitfully call it the second pillar to make it sound less ominous. A far cry indeed from my advice to take advantage of the generous tax incentives for voluntary pensions.
The second pillar means that every worker, including those on the minimum wage, would not just pay a national insurance contribution but, on top, would be forced to pay a contribution to a private pension. No tax incentives needed there as everyone would be forced in. Typical Nationalist hypocrisy.
With the Nationalist Party, nothing comes for free. Zahra was clear about that. In describing the 2006 reform he states: “What did the reform entail? For those born after 1962, the pension age went up to 65 years. Instead of 30 years of contributions to receive a pension, one had to have 41 years of contributions. And the national insurance contributions went up by about a third.”
True enough, this was then inevitable since, under the Nationalists, economic growth was so low that any sort of increase in real pensions was virtually impossible. Our economic turnaround since then has made the real pension deep freeze of before 2013 something of the past.
On the contrary, we can now instead look forward to aboveinflation increases to all pensioners for the foreseeable future; something the PN in government only guaranteed to those born post 1962.
As for Zahra’s claim that we have done away with the fiveyearly pension system reviews, this is yet another fantasy, or should I call it ‘myth’?
If he had googled “pension reform Malta” he would have found the 2020 review, which has resulted in a Malta Pension Plan, which was submitted to the European Commission in 2022.
The 2025 pension review is also under way and I look forward to its recommendations.
Our economic turnaround has made the real pension deep freeze of before 2013 something of the past