Contributory Pensions
The Social Security Act (Chapter 318) provides for a Two-Thirds Pension Scheme and for a Retirement Pension Scheme with the first one providing an earnings related pension and the latter providing a flat rate pension. Beneficiares eligible to a minimum retirement or widows pension, to an Invalidity pension, or in receipt of a service pension, are awarded a flat rate pension. Beneficiaries eligible to an earnings related retirement or survivors pension, are awarded an earnings related two-thirds pension.
Retirement age currently stands at 62 and is gradually increasing to reach 65 by 2027, and the maximum contribution period to draw a full pension is currently 35 years. It will increase to 40 years for those born between 1/1/1962 and 31/12/1968, and 41 years for those born on orafter 1/1/1969.
The two-thirds pension rate provides for a maximum retirement and survivors rate that reflects the maximum capped social security contribution rate. All pensions are adjusted annually as a result of the cost of living awarded by Government.Reforms to the pensions system are on-going to maintain the sustainability and adequacy of the system for current and future beneficiaries. Apart from increases in the pension age and contributory periods, recent reforms also included the launch of second and third pillar pensions.
Social Security Benefits
The Social Security Act (Cap. 318.) of the Laws of Malta, provides for two basic schemes, namely the Contributory Scheme and the Non-Contributory Scheme. The basic requirement for entitlement under the Contributory Scheme is that specific contribution conditions are met. In the Non-Contributory Scheme, the basic requirement is that the conditions of the means-test are met.
The contributory scheme in Malta is a system where an employee or self-employed person pays a weekly contribution as laid down by the Social Security Act (Cap. 318.). The social security contributions paid during the period in which a person is gainfully active is used to finance contingencies that may arise such as sickness, unemployment or retirement as required.
The Non-Contributory Scheme, which originally was meant to cater for persons below the ‘poverty line’ has over a period of years evolved into a comprehensive scheme with a number of provisions that are intertwined in such a way that one type of benefit supplements another. This has made possible the allocation of more than one benefit at the same time thus providing simultaneous coverage in those cases where more than one contingency is present.
During these last years, the Social Security scheme evolved with the introduction of Active Labour Market Policies. Such policies, such as the Tapering of Benefits Scheme and the In Work Benefit, contributed to counter the benefit trap, amongst other factors.
The Speaker
George Cremona is the Director General (Benefits Compliance) at the Ministry for the Family, Children's Rights and Social Solidarity.