12 July 2006


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Cristina rebuts MLP’s pension claims

James Debono

Social Solidarity Minister Dolores Cristina rubbished the MLP’s position on pension reform describing it as “blatant political electioneering.”
On Saturday instead of spelling out its blueprint for pension reform, the Labour Party proposed yet another timetable of consultations to start in 2009, a national congress the following year leading to another White Paper, and the start of the ensuing reform in 2011 that would happen with “national consensus”.
But according to Minister Cristina there is no need for another round of consultations. Talking to Business Today, the minister recalled that similar consultation was carried out in 2005 when all constituted bodies, except the MLP which had remained silent, agreed that reforming the pension system is a necessity if the adequacy and sustainability of future pensions is to be guaranteed.
Reacting to the MLP’s criticism that there is no need to rush as there is still plenty of time left before the pension time bomb explodes, the Minister insisted that pension reforms take time to render their desired effects.
“Ignoring this fact will have one immediate and pervasive impact – the longer the delay, the harsher the measures for reform will be.”
According to Cristina the government is seeking to avoid harsh and radical measures in the immediate term by opting for incremental approach in the medium and long term.
According to the MLP, the reform can be delayed to 2011. But Cristina claimed that this would have the perverse effect of undermining the transitional and the phasing measures proposed by the present government.
In March government had proposed that people aged over 55 years of age would be exempted from the reform.
“If the reforms are delayed, a future government would be forced to consider more immediate measures, as people who are now in the range of 40 to 45 years of age would be compromised,” Cristina told Business Today.
Cristina rebutted the MLP’s claim that there is no risk of a crisis in the sustainability of the pension system before 2025.
But according to Cristina, the models carried out by the World Bank and the Pensions Working Group disprove the MLP’s assertion.
These models show that the pensions replacement rate, that is the value of pensions vis-à-vis the average wage in Malta, will dramatically fall from approximately 60 per cent today to 38 per cent in 2025.
“The MLP’s position is nothing less than irresponsible, and future generations, who have agreed in principle with the proposals made in the Final Report of the Pensions Working Group, will have every right to hold Dr Sant personally responsible,”

jdebono@mediatoday.com.mt



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