Permanent secretaries, cabinet secretary given special pension by stealth

Tista taqra dan l-artiklu bil-Malti.

Permanent secretaries in the public service and the cabinet secretary have been awarded a special second pension by stealth through a hurried amendment in the Public Administration Act, kept under the radar by parliament since 2019.

The amendment, approved by both Labour Party and Nationalist Party MPs four years ago, was not publicised and did not make it to the media until now. It provides an additional ‘privileged service pension’, which comes in addition to their regular state pension.

It is awarded to permanent or cabinet secretaries who have served at least one term, most of whom were put in their positions by ministers or the prime minister.

They now join parliament and judiciary members in receiving a second, uncapped pension aside from the one earned through national insurance contributions.

This change in the Pensions Ordnance creates another category of pensioners granted privileges over ordinary citizens, even if they served just one term.

Independent MEP candidate Arnold Cassola sounded the alarm over the situation in a social media post, highlighting that the ‘secret’ amendment privileges those in political positions.

Research carried out by The Shift shows that the legal amendment was inserted into a parliamentary act and many other minor amendments to the Public Administration Act. This meant that the amendment to the Pensions Ordinance passed relatively unnoticed, a likely deliberate move.

During the parliamentary committee stage, held in January 2019, then-principal permanent secretary Mario Cutajar attended the MPs committee meeting to ensure that the amendment was inserted into the law as proposed.

Cutajar was then among the first to benefit from the privileged pension when he retired from his post a year later, in 2020.

Other beneficiaries of this privileged pension include many permanent secretaries who served under the PN administration until 2013 and were replaced as soon as Labour took over.

The Shift is informed that these ‘privileged’ former permanent secretaries exerted pressure on the PN to vote in favour of the legal changes presented by the government.

What is a privileged service pension?

Under Maltese law, all those retiring from work who have paid their national insurance contributions are entitled to a contributory pension when they reach 65.

Although this should amount to two-thirds of their regular pay upon retirement, the pension eligibility amount is capped and cannot exceed a certain threshold. Usually, this amounts to a maximum of €1,300 a month.

In 1975, then Labour Party prime minister Dom Mintoff introduced a unique service pension exclusively for members of parliament. Through this controversial law, MPs serving for two terms had become eligible for a second pension on top of their normal contributory one.

This second special pension was uncapped, with beneficiaries entitled to the full two-thirds of an MP honoraria, and increased each time MPs got an increase. This was also extended to members of the cabinet and the President of Malta, who had a second privileged pension, uncapped on the current salary of the last political office they occupied.

A few years ago, to incentivise the best legal brains to become judiciary members, a similar privileged service pension was given to judges and magistrates, with an increase in their retirement age to 68 years.

Now, through a ‘low-profile’ legal amendment, all those occupying the posts of principal permanent secretary, permanent secretary or cabinet secretary have also joined the top-tier service pension eligibility.