Maltastar
The only counter-argument could be
that residential property, though loaded with value does not produce the cash
streams necessary to supplement the inadequate state pensions. True, but not
quite. There is no reason why schemes could not be devised to turn property
equity into revenue streams. At the very least pensioners could sell their
probably largish house and move to smaller but still adequate (given quite
different accommodation needs during pensionable age)
residence releasing equity value and use such released liquid wealth to sustain
their pensions.
In some instances it would be possible to divide the house and rent out part of it which is not required to live comfortably as a pensioner. This could relieve demand pressure for new building in this nutshell sized island, and bring down rents to affordable levels make renting an affordable alternative for young people.
But more practically, insurance companies could offer annuities against the value of the property. Basically the property could be sold to the insurance company at current market rates and rented back on a long term basis for a duration linked to the death of the last surviving partner. The annuity payment will cover both the rent and a surplus which would be used to supplement the state pension. Thus the longer they live the pensioners would eat into the value of the annuity on termination, which value would be held for account of the estate upon the death of the last surviving partner.
The complainants to such an arrangement could be the heirs. But why should they? Do they have a right to their inheritance superior to the right of the pensioners to live comfortably their pension age? Should the state offer fiscal incentives for supplementary pensions which in the end benefit estate beneficiaries to inherit assets they have contributed nothing for and on which they pay little or no tax given that there are no estate duties?
I think if viewed on this basis we
can probably conclude that we do not really have a pension crisis. We can carry
the case further and suggest that the government pegs the maximum pension at its
current nominal level and allow the pensions and similar benefits to be paid
strictly from the contributions made by employees, employers and self-employed
contributions without government making any further contributions (except in its
role as employer).
The money ‘saved’ by government will be used to finance the vote of health and care for the elderly who is currently financed through the national insurance fund. Consequently what will happen is the establishment of linkages of income sources with expenditure applications and no real saving per se. This is in line with what The Finance Minister had proposed in the 2002 budget speech. Once these linkages are established then they have to be maintained at a self-sufficient level.
How this can be done needs further study and elaboration but the principle needs to be established. Ultimately we should aim for a national health insurance scheme which guarantees top-level medical service to all, but renders subject to means testing/contributory insurance cover the entitlement to medicine, the entitlement to hospital accommodation and catering service, and the entitlement to out-patient services.
May be if viewed on this basis we can worry less about funding the pension non-crisis and apply more resources to keeping us healthy both during our work-life and during our pension age. I think it is realistic to assume that government can’t do both and prioritising is necessary.
The only counter-argument could be
that residential property, though loaded with value does not produce the cash
streams necessary to supplement the inadequate state pensions. True, but not
quite. There is no reason why schemes could not be devised to turn property
equity into revenue streams. At the very least pensioners could sell their
probably largish house and move to smaller but still adequate (given quite
different accommodation needs during pensionable age)
residence releasing equity value and use such released liquid wealth to sustain
their pensions.In some instances it would be possible to divide the house and rent out part of it which is not required to live comfortably as a pensioner. This could relieve demand pressure for new building in this nutshell sized island, and bring down rents to affordable levels make renting an affordable alternative for young people.
But more practically, insurance companies could offer annuities against the value of the property. Basically the property could be sold to the insurance company at current market rates and rented back on a long term basis for a duration linked to the death of the last surviving partner. The annuity payment will cover both the rent and a surplus which would be used to supplement the state pension. Thus the longer they live the pensioners would eat into the value of the annuity on termination, which value would be held for account of the estate upon the death of the last surviving partner.
The complainants to such an arrangement could be the heirs. But why should they? Do they have a right to their inheritance superior to the right of the pensioners to live comfortably their pension age? Should the state offer fiscal incentives for supplementary pensions which in the end benefit estate beneficiaries to inherit assets they have contributed nothing for and on which they pay little or no tax given that there are no estate duties?
The money ‘saved’ by government will be used to finance the vote of health and care for the elderly who is currently financed through the national insurance fund. Consequently what will happen is the establishment of linkages of income sources with expenditure applications and no real saving per se. This is in line with what The Finance Minister had proposed in the 2002 budget speech. Once these linkages are established then they have to be maintained at a self-sufficient level.
How this can be done needs further study and elaboration but the principle needs to be established. Ultimately we should aim for a national health insurance scheme which guarantees top-level medical service to all, but renders subject to means testing/contributory insurance cover the entitlement to medicine, the entitlement to hospital accommodation and catering service, and the entitlement to out-patient services.
May be if viewed on this basis we can worry less about funding the pension non-crisis and apply more resources to keeping us healthy both during our work-life and during our pension age. I think it is realistic to assume that government can’t do both and prioritising is necessary.
Portfolio
Strategy 1: No Risk Lm 1006.276
Strategy 2: Medium Risk Lm 998.12 (after Lm40 charges)
Strategy 3: High Risk Lm Lm 1142.361(after Lm20 charges)
Strategy 4 High Risk For Currency . Lm 1015.10 (after Lm40 charges)
All prices and rates of exchange are the latest available on
All strategies moved forward but the highest gains were made by strategies 3 and 4 which have the highest content of equity holdings. Equities moved forward throughout the week and even the Maltacom share price which is reflected in Strategy 3 turned up again though it is still short of the highs of 2 weeks ago.
No changes were effected to the portfolio.
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