Government considering introduction of home equity fund for pensioners

Encouraging saving among young people and the introduction of a home equity fund for pensioners are among the proposals which government is considering, social solidarity minister Michael Farrugia said.

Addressing the launch of the pension reform strategy paper, Farrugia explained that 71% of pensioners who are at risk of poverty are “cash poor but property rich.”

In total, some 8,000 pensioners are in risk of poverty and Farrugia explained that government is seriously considering the recommendation to create a scheme in which pensioners can access the equity tied up to their home in the form of a mortgage or a home reversion through which pensions could sell part or the whole home in return for payments but remain in their property until they die.

Farrugia also underlined the importance to encourage young people to save money through private pension schemes.

While noting that government was not in agreement with all 27 proposals put forward by the Pensions Strategy Group, he said that government is “ready to be persuaded.”

He also welcomed the cross-party consensus on keeping the pensionable age at 65.

Underlining the “complexity” of pension reform, finance minister Edward Scicluna said that it was no easy task to find a balance between adequacy and sustainability.

Describing pensions as a social pact, Scicluna said “an increase in pensions today requires bigger contributions by workers currently in the work force.”

Confirming that government to be discussing proposals in coming weeks, the minister noted that pension reform cannot carried out in isolation but other factors such as health and elderly care must be reformed accordingly.