31 August 2005

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A whopping Lm15.4m spent on invalidity pensions

Michaela Muscat

The Lm1,379,469 spent on unemployment benefits is whimsical when compared to the Lm15,425,952 allotted to invalidity pensions in 2004. This dispels the myth that the unemployed, account for most of the ‘free-riding’.
These figures were released last week by the National Statistics Office as part of the Government finance report, for the first half of 2005.
Pensions in respect of invalidity have increased significantly over the last three years, spurring Social Welfare Minister Dolores Cristina to set up a unit to account for the increases. The unit has not yet publicly delivered a report but analysts easily point out that the system by which people are boarded out, therefore eligible for an invalidity pension, is prone to abuse and lacks adequate checks and balances.

The number of boarded out individuals increased disproportionately on the eve of the last general election, giving rise to speculation that the abuse of invalidity pensions is more than individuals’ attempts to abuse of the system.
The bulk allocated to pensions in respect of retirement alone amount to Lm151,267,710 – 51.57 per cent of Social Security Benefits. The colossal burden that pensions are proving to be on the welfare state in continental Europe has indeed led to a call for reforms in the pension system. This has alarmed trade unions all over Europe who vehemently opposes the conversion to the Anglo-Saxon economic model that amongst other things champions a small or non-existent welfare state.
In Malta, the Prime Minister has not yet made public government’s final proposals for pension reform after being presented with a blueprint for reform by the working group entrusted to study the issue. The report was delivered to the Prime Minister over a month ago.
Non-contributory benefits, including children’s allowance, old age, disability pensions and social, medical and supplementary assistance are also registering a steady increase.
However trade unions and other organisations worried about the erosion of the welfare state may need not worry as the amount of the Gross Domestic Product at current market prices allotted to social security benefits has been on the increase. The total percentage of social benefits - as of GDP, measured at 11.23 per cent in 2004.


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