The government has announced the final proposals for the pensions reform, following years of debate and presentation of several proposals. During a press conference, Prime Minister Lawrence Gonzi stated that persons who will be 45 years of age and below on January 1, 2007 will have to fully comply by the new pensions system. One of the main changes is the increase in the statutory retirement age from 61 to 65 years of age, however, this will be carried out in an incremental manner.
The government’s proposals states that as at January 1, 2007, there will be no change for persons of 55 years of age and over; the retirement age for those aged between 51 years to 54 years will be 62 years; for those aged between 48 years to 50 years-63 years; for those who will have between 46 and 47 years the retirement age will be 64 years; and for those who will have 45 years and under, the retirement age will be 65 years.
The retirement prior to 65 years of age will be discouraged, however, this will be possible for those aged 62, with a decrease in his/her pension. 65-year-old persons may continue working without paying the National Insurance, while receiving the full pension payment.
The government will maintain the Minimum Pension Guarantee. Dr Gonzi explained that a process is expected to start so that the minimum national pension will be established at 60 per cent of the average national income over a number of years. He added that in this way the minimum pension will increase in the future and will be revised periodically not only according to inflation but also according to the increase in the average national income.
With regard to the Two-Thirds Pension, Dr Gonzi said that this will be calculated on the basic pay. The contribution period for the accumulation of the Two-Thirds Pension will increase from 30 years to 40 years in a gradual way. A person who is 25 years of age as at January 1, 2007 needs an accumulation period of 40 years, which will decrease by one year for persons aged between 25 and 30 years of age (example: 25 years-40; 26 years-39; 27 years-38 etc.). This means that a 30-year-old person will have an accumulation of 30 years and a person aged 35 years or more will have an accumulation of 30 years.
The pension for those who are aged below 46 years will be calculated on the best 10 years of the last 20 years of employment. This is applicable both for employed and self-employed persons.
The government is proposing that the Maximum Pension Income ceiling of Lm6,750 that has remained static since 1981, will increase each year to reach a ceiling of Lm9,000 by 2014. The increase will be accomplished each year according to the inflation rate or according to a five-year periodical revision.
Dr Gonzi explained that the government will carry out an analysis every five years, aiming to have a clear picture of the country’s situation and adjust the pensions system according to the country’s needs.
See also:
Government to draw up pension reform final document
By MaltaMedia News - Feb 22, 2006, 11:00 CET
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