23 August 2006


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Business Today



Pension bill increases 26% in just two years

James Debono

The bill on the contributory two thirds pension increased by 13.5 per cent in the first six months of 2006 when compared to the same period in 2005, and by 26 per cent when compared to the same period two years ago.
This increase is the result of the first retirees pertaining to the post-World War II baby boom generation reaching retirement age. And with more people becoming pensioners, the bill is also set to rise.
While the increase in the two-thirds pensions amounted to 12.2 per cent between the first six months of 2004 and the same period in 2005, the bill increased by 13.5 per cent between the corresponding periods in 2005 and 2006.
The total outlay on old age pensions in the first six months of 2006 has increased by 8.5 per cent.
The increase in the pension bill contrasted with smaller increases and declines in other non-contributory pensions.
The bill on children allowance has decreased by 3.7 per cent when compared to the same period in 2005 and by a substantial 10 per cent since 2004.
The bill on children allowance has been declining since 2002, a reflection that the number of beneficiaries could be declining as the Lm10,000 annual income threshold has remained frozen for the past decade.
While the bill for invalidity pensions had increased by a substantial 5.6 per cent between the first six months of 2004 and the same period in 2005, the same bill increased by just two per cent between the first half of 2005 and the corresponding period in 2006.
This could be a reflection of a clamp down against abusers during the past year, something which was promised by Social Solidarity Minister Dolores Cristina. Legislation to this effect was also passed earlier on this year.
The bill on unemployment benefits has increased by 14 per cent in the first half of 2006 when compared to the same period in 2005. Yet, the same bill decreased by 15 per cent when compared to the same period in 2004. Unemployment statistics, however need to be read with caution since they only cover the first six months and therefore job losses in major manufacturing firms towards the end of 2005 are not taken into account.
Overall the expenditure on social benefits increased by 5.8 per cent when compared to the first six months of 2005 and by 12.4 since the same period in 2004.

jdebono@mediatoday.com.mt



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