New pensions put Maltese women in greater risk of poverty

from The Malta Star

The new pension system which came in force at the beginning of the year discriminates against Maltese women - it makes it more difficult for them to obtain an adequate pension and avoid living below the poverty line.

Social Watch, the international network of citizens’ organisations struggling to eradicate poverty, slammed government for not doing enough to ensure that the new pension system does not leave women, low income earners, and other groups without a suitable old age pension.

In its annual report for 2007, “Social Watch 2007 report - in dignity and rights”, the platform of NGDOs states: “The parametric reforms are driven by the objective of increasing revenues and decreasing ‘generosity’ in terms of the annual pension benefits paid out, and thus they are likely to have a negative impact on the incomes of certain strata of pensioners. The new pension reform is mainly driven by demographic pressure and fiscal stability concerns, and its impact on income adequacy and pensioner poverty does not always appear to have been given sufficient assessment.”

“The new reform sends a clear signal to individuals that they need to work more to qualify for the same benefit, rather than simply cutting benefits and then possibly facing a political backlash and being forced to increase them once again.”

The new pension scheme also fails to provide a system of automatic payment to persons who dedicate their lives to care for elderly and less healthy individuals in their families. The social benefits available for these persons are restricted, and eligibility depends on conditions such as the patient has to be bedridden or wheelchair bound. “In several EU countries, care of the elderly has begun to be credited within the pension system, an important feature left out of the new pension scheme, even though home care is considered a priority in elderly care in Malta.”

On a positive note, the report praises Malta for continuing to update its legislation to increase gender equality. Malta is the EU member state with the greatest level of equality between men and women when it comes to wages and salaries. Yet, the gap between men and women holding political or top decision making posts in Malta is still the widest in Europe.

Lower income workers disadvantaged

The ‘Social Watch’ report argues that the new criteria for determining the final pension payment that the elderly workers will receive puts low income earners and workers who had steep earning rises in their careers at a disadvantage, possibly leaving them with less income and the risk of living elderly life in poverty.

In the older system, the amount of pension a worker would get was calculated on the basis of the best three out of the final 10 years of work, when most workers are very likely to have their highest income. But in the new system, the pension payment is calculated on the basis of the best 10 years of salaries out of the full 40 years of work required to be entitled for the benefit. It is very likely than in selecting the best ten years of a worker’s earning history, one would have to include lower income levels which would have been left out in the previous system of basing pension payments on just three years of income.
“The [pension] remuneration may no longer be representative of the final salary of workers before they retire… with the new changes, pension payments are expected to be on the decline, which in turn is likely to raise the risk of the elderly falling back on means-tested social assistance or dropping below the poverty line,” the report states.

Discriminates against women

The report on Malta’s pension system, penned by Joseph Sammut from Kopin, explains that in the new system, which government enacted in 2006, only those who work (and contribute payments to the scheme) for at least 40 years are entitled for an old age pension. This is 30 working years more than the previous system, in which only a decade of work was required to qualify for pensions.

“Under the new scheme, it will be difficult for many married women and mothers to reach the 40-year target for a full two-thirds pension; women in certain age groups, who stopped participating in the economy for a period of 10 years or more, will not have made the contributions needed to qualify. Although the new scheme gives two years credit for each child, considering the wide gender gap in employment rates there is a need for more effective means to protect women against discrimination in their old age. Women should be better remunerated for their care-giving role in the family, a factor which has a considerable weight in Maltese society.”

There is still a large gap between the number of employed women (37%) and that of employed men (73.8%). Moreover, one out of every five female workers (21.8%) has only a part time job, while only 4.5% of working men are employed on a part-time basis only. The employment rate for older women is 12.4% compared to 50.8% for men. The rate of employment for women between the ages of 20 and 49 falls by 8.9 percentage points when they have a child, while that of men increases by 4.4 percentage points.

44% of women without paid employment state that they are not employed due to personal or family responsibilities. This goes to show that many Maltese women devote more time to unpaid work than men. Their career patterns are based on their care obligations in the family. Yet, the new pensions system does not sufficiently provide for this.

Doubts on second pillar pensions

As part of the new pension scheme, government also announced it will be introducing a second pillar pension. This will be formed through allocating a share of social services contributions to be invested through a retirement fund handled by professional fund managers. In its report, Social Watch refers to a study by the Hungarian Central Bank, which found out that “returns recorded so far in the private pension funds fall short of expectations and, on condition that these low returns persist, the second pillar is projected to provide annuities that do not make up for the reduction in benefits received from the public pillar.”

Standing up against poverty

from Malta Today

Clayton Mercieca and Angie Farrugia are two social workers currently promoting one of the least talked about issues on the world stage. Development policy is certainly almost non-existent on the political agenda, although at governmental level, a draft for Malta’s development policy on international aid is yet to be crystallised. In the meantime, the Malta NGDO (non-government development organisations) platform strives to bring development issue to the fore of political agendas.

“It’s an issue related to of human development, and taking into account those factors, such as human rights, environment, poverty, economic development, which affect human beings in other less developed parts of the world and future generations. Malta too has a role to play in the human development of developing and poorer countries,” Clayton and Angie say.

The Platform was founded on 26 June 2001, on the initiative of Kopin (Koperazzjoni Internazzjonali - Malta), and now has 10 members, amongst them the Integra Foundation, the Jesuit Centre for Faith and Justice and the Jesuit Refugee Service, Kare4Kenya, Koperattive Kummerc Gust, Moviment Graffitti, Share Foundation and the Third World Group.

“We do represent the face of ‘development’ in Malta, and recognised officially by the Maltese foreign ministry,” Clayton says. “As a platform we coordinate work between the various voluntary and non-governmental organisations working in international development and humanitarian aid. As the coordinating force, we aim to improve Malta’s contribution to international development by promoting the exchange of experience, ideas and information amongst its members, between networks of NGOs in Malta and internationally, with the Maltese government, and between its members and other Maltese bodies with an interest in international development and humanitarian aid.”

To this end, the platform has also engaged with government on its draft of the National Development Policy, a novel document for Malta whose international development aims have so far been limited. Angie says one of the aims of today’s conference is to implement the government’s development policy. “We will present our development manifesto and see which party’s manifesto is the most development friendly.”

Today, thousands all over the world will be standing up for a minute at the same time to emphasis the importance in eliminating human rights violation and extreme poverty. The platform is inviting the public to participate in a Stand Up by standing up, as a group, for one minute. The outcome will be demonstrated during the Millennium Development Goals (MDG) conference held today at the Mediterranean Conference Centre, in Valletta, between 9am and 4pm.

“The International Day for the Eradication of Poverty has been observed every year since 1993, when the UN General Assembly designated this day to promote awareness of the need to eradicate poverty and destitution in all countries, particularly in developing countries. At the Millennium Summit world leaders committed themselves to cutting by half, by the year 2015, the number of people living in extreme poverty – people whose income is less than one dollar a day,” Clayton says.

The theme for this year’s International Day for the Eradication of Poverty is “Working together out of poverty”. This day will highlight the need for a truly global anti-poverty alliance, one in which both developed and developing countries work together to end poverty.

“Part of our role is in fact to raise awareness about these development issues. People must not forget about other countries just because things in Malta are good or are better than the situation in other countries,” Angie says. “In Malta we might no be able to imagine situations such as human rights breaches and extreme poverty over here. We want to try and sensitise people to these realities abroad. Naturally, once we become more aware of these issues, it will be normal to support development policies advocated by government and also private enterprise such as buying fair trade goods.”

“Until now, political parties have not really shown much interest in development policy,” Clayton says. “Whereas European governments and political parties find international development policies to be particular vote-catchers for certain parts of their electorate. In contrast, Maltese politics seems to take the opposite course. Development might actually be a vote-loser. And that is part of our job, to create awareness of these issues.”

As a founder-member of the pan-European NGDO confederation CONCORD, the Maltese Platform has a key role in advocating on European Union development policy. The platform for example has taken to task the Maltese government’s statements on development aid, especially with placing an obligation for aid to developing countries on condition that migrants in Malta are repatriated or resettled. According to the European Commission’s April 2007 figures, Malta spent €7 million or 0.15 per cent of GNI on ODA in 2006 – less than what it contributed in 2004, when it spent 0.18 per cent in ODA. The figure was then inflated by over 40 per cent, according to claims by Concord, which claims Maltese aid has actually been decreasing proportionally since 2004, and is still inflated. To this day, Malta does not have an official development policy, meaning that the government is operating without clear priorities.

“Malta is committed as an EU member to give development aid to developing countries, and we try to campaign for a transparent way of making these grants and aid accountable and achieve their desired end, rather than being just a statistical entry in the government’s books,” Angie says. “We also promote fair trade goods whose consumption actually aids developing countries in investing in better schools, and dissuade people from buying goods from companies which make use of child labour.”
Clayton chips say that Malta is part of a globalised world which cannot escape those brand names which might also make use of child labour. “Watch out for these companies’ code of ethics which are available on their websites.”