Said tells Council Malta will not increase retirement age, change COLA

Justice minister Chris Said has voiced Malta's disagreement with the European Commission's proposal on increasing Malta's retirement age and indexing the Cost Of Living Allowance (COLA) increase to productivity rather than inflation increases.

"The Maltese government has already undertaken action to responsibly address the issue of the long-term sustainability of the pension reform, including adopting increases in the retirement age in 2007," Said told his European counterparts of employment and social policy ministers.

The European Council also said Malta must ensure the sustainability of pensions by increasing the retirement age according to life expectancy, and encourage the use of private pension savings, discourage early retirement schemes and integrate older workers into the labour force.

Malta has implemented the first phase of its pension reform which includes elements that go beyond what is currently required by Malta's demographic profile, given the gains in Malta's effective retirement age of recent years.

"As a result of this action, the government does not believe that there is any need to make any amendments to the retirement age further to what is stipulated in the current regulation until at least 2029," Said said. 

The minister also stated that over the past year the government has engaged with stakeholders on a review of the pensions system with the aim of undertaking further reform. A pensions working group has already published a report on the entire pensions system. Its recommendations are currently subject to an ongoing consultation with the Malta Council for Economic and Social Development (MCESD) and its members.

On Thursday, the Employment, Social Policy, Health and Consumer Affairs Council told Said that Malta had to take steps to reduce its high rate of early school-leaving.

In the Council's recommendations to Malta, ministers said the country must pursue efforts in the education sector to match the skills required by the labour market, and enhance the provision of more childcare centres to reduce the gender employment gap.

The Council also said Malta must reform its COLA wage bargaining system to better reflect developments in labour productivity and reduce the impact of prices of imports on the index.

Eurostat data show that whereas in 1960 there were on average about three youngsters (aged 0-14 years) for every elderly person (aged 65 or over), by 2060 there may be more than two elderly people for each youngster.

Eurostat's figures show the proportion of the population in the EU-27 aged 55 and over rose from 25% in 1990 to 30% in 2010, and the number is estimated to reach around 40% by 2060.

On Friday, the Malta-EU Steering Action Committee (MEUSAC) focused on the Commission's White Paper on pensions. Godwin Mifsud, the director on structural economic research within the Finance Ministry, said that the White Paper was important in view of an ageing population that was heavily impacting the EU's economic and budgetary decisions.

"Among the many challenges that we face, we must find a way to safeguard sustainable and adequate pensions while seeking to increase female and elderly participation in the labour market," Mifsud said.

Reforms proposed by the European Commission include amending the retirement age, improved health measures and working conditions to encourage people to remain active in the labour market, tackling the pensions difference between men and women and the development of different forms of private pensions. Mifsud insisted that the responsibility of the pensions reforms should be shouldered by the members states while the EU should provide a number of instruments such as funds, and coordination of policies adopted to help the countries.

Director-general of the Social Services department Joe Camilleri said that Malta wasn't against the coordination of national policy of the members states but that the reform should reflect the needs of the individual states. Camilleri insisted that Malta was giving importance to the sustainability and adequacy of pensions where every five years government was revising the pensions system.

MEUSAC also heard proposals to reduce the discrepancy between the pensions received by males and females, the need for a study to establish the minimum pension, the need to raise awareness on pensions, the possibility to introduce non-EU citizens in the pensions system and the need to emphasise the balance between family life and work.

Minister Chris Said also announced that government was to set up a Pension Strategic Unit while a commission has already been set up to work on an educative strategy.