The History of Social Security in Malta

The development of Social Security in Malta could be traced back to the time when the Order of the Knights of St. John ruled over the island. In fact official documentation exists whereby it has been conclusively established that a part of the activities carried out on the island by the Knights centred around the provision of assistance in cash and in kind to the poor and to certain other deserving categories of the Maltese population. Later on, towards mid 1600, the Knights officially set up charitable bodies.
 
In 1885 the first-ever Government sponsored social benefit as of right, was introduced on the island. And the first beneficiaries were the members of the Malta Police Force in whose respect a pension scheme was brought to being. Next on the list were the members of the Malta Civil Service.
 
Social Security measures as we know them today started after the introduction of self-government in 1921. They have been systematically augmented ever since.
 
A 'Widows and Orphans Pensions Act' was introduced in 1927 "to make provision for the granting of pensions to widows and children of deceased Public Officers". To-date both schemes are administered by the Treasury Department.
 
In 1929, the first-ever Social Security contributory scheme according short-term coverage to all workers on the island in respect of injury at work was introduced. This became possible through the enactment of the 'Workmen's Compensation Act' which granted the payment of injury benefit to those workers who were injured on duty as a result of their employment. Contributions towards this scheme were compulsory and were made on a tripartite basis, with employers, employees and the State each paying an equal share into the fund so that the scheme would remain viable. The concept of social insurance was thus introduced into our islands for the first time.
 
The Old Age Pensions Act, which was brought into effect on the 1st August 1948, provided for the payment of pensions to persons over the age of 60 years. Unlike the 'Workmen's Compensation Act', this Act was not based on contributions, but on a financial means test of the person claiming such pension.
 
The early 50's, then, saw the advent of an unregulated scheme of financial assistance (then known as 'relief') for needy families whose head was unemployed. This new scheme was not based on contributions but on the means of the individual.
 
In 1956 'The National Assistance Act' was brought into being. This provided for the issue of social and medical assistance (the latter, both in cash and in kind) to heads of household who were unemployed and either in search of employment or unable to perform any work because of some specific disease provided their family's financial resources fell below a certain level. Those who suffered from a chronic disease were allowed medical assistance in kind free of charge as well, irrespective of their family's financial resources. In addition to social and medical assistance, this Act also provided for free institutional care for the aged, free hospitalisation and treatment in all Government-run institutions/hospitals. Both these latter benefits were accorded, provided claimant satisfied a means test. Furthermore, whoever qualified for social assistance was also paid a rent allowance if the head of household was paying rent for his place of residence.
 
Simultaneously, an Act providing for a comprehensive scheme of social insurance financed through contributions paid by the employee, his employer and the State was introduced covering a wide range of benefits, allowances and pensions. This scheme was compulsory and the contingencies covered were sickness, employment injuries/diseases, unemployment, widowhood, orphanhood and old age; and in order to qualify for benefit the claimant had to satisfy the contribution conditions attached to the payment of the particular benefit that was being claimed. This Act was entitled 'The National Insurance Act'. With the coming into force of this Act, the 'Workmen's Compensation Act' was repealed once and for all since its provisions had more than been completely covered by the provisions governing employment injuries/diseases under this new Act.
 
A year later, that is in 1957, the provisions of the 'Old Age Pensions Act' of 1948 were extended to blind persons, thus introducing a new non-contributory pension termed Blindness Pension based on an identical means test to that in force in respect of a non-contributory Old Age Pension. Initially, this pension was payable only to blind persons who were aged 40 years or over. However, in 1962 this qualifying age was lowered to 14 years thus tying to the school-leaving age of the time.
 
In 1965 the inclusion, within the scope of the 'National Insurance Act', of self-employed persons and non-employed persons made this scheme applicable to practically all of the Maltese population. In that same year there was the introduction of a contributory scheme for the award of an Invalidity Pension as a new benefit.
 
In 1972 the Government introduced for the first time the payment of an annual Bonus to all Social Security pensioners and recipients of Social Assistance. Initially this Bonus was being paid 'ex-gratia'; but then after some years an 'ad hoc' provision was made in each of the three Acts referred to above.
 
In 1974, a scheme of Child Allowances was introduced, again as part of the 'National Insurance Act'. Payment of such an allowance was not subjected to some specific contribution test as had been the case up to that date with other benefits payable under the said Act.
 
In 1974, a non-contributory Handicapped Pension scheme was introduced which was further extended to cover persons who were suffering from a mental severe sub-normality or from cerebral palsy. These provisions were once again further extended in 1975 to include certain other categories of severely handicapped persons.
 
In 1979 a new contributory scheme for the payment of a wage/income related retirement pension was introduced within the ambit of the 'National Insurance Act', accompanied by a pension scheme for widows calculated on their deceased husband's wage/income. These new schemes were supplemented by a reformatted contributions system whereby a wage-related contribution and an income-related contribution were introduced in respect of employed persons and self-employed persons, respectively. Furthermore, a National Minimum Pension was introduced whereby any person claiming a contributory pension would not fall below a certain rate of pension provided he had a full contribution record to his credit.
 
In 1981 the payment of Maternity Benefit was introduced. This benefit was made payable to all pregnant females and the relative payment covered the last 8 weeks prior to confinement and the first 5 weeks after confinement. Moreover, Maternity Leave on full pay, in terms of the Conditions of Employment (Regulation) Act, is payable to females who do not apply for Maternity Benefit.
 
In January 1986 payment of Social Assistance was extended to single or widowed females who were on their own regularly taking care of an elderly or handicapped relative.
 
Until December 1986, social security in Malta was administered through three separate laws: the Old Age Pensions Act 1948, The National Assistance Act 1956 and the National Insurance Act of 1956. A more comprehensive approach was adopted in January 1987 when these Acts were consolidated into the Social Security Act 1987 (Cap 318 of the revised laws of Malta).
 
Social Security in Malta after the Consolidation of Social Security laws in 1987
 
In January 1988 two new benefits were introduced, the Handicapped Child Allowance and a means-tested Parental Allowance. A common pre-condition towards the payment of these allowances was that the beneficiary (normally the mother) should, in the first instance, be entitled to Children's Allowance.
 
Again, In January 1989 two new benefits were introduced, viz.: - A Family Bonus (payable to recipients of Children's Allowance) and short-term Emergency Assistance in cash or in kind for home-driven destitute females who find temporary shelter in a home for such females.
 
In January 1991, a Widower's Pension and Orphan's Supplementary Allowance was introduced.
 
In January, 1992 a Carer's Pension payable to all unmarried or widowed persons who are taking care, on their own of a parent who is bed-ridden or confined to a wheel-chair was introduced.
 
In January 1996 a Supplementary Allowance was introduced to all Maltese citizens whose total income fell below a certain level.
 
Also, in January 1996 the Child Allowance scheme, which had been introduced in 1974, was reviewed and the entitlement to such Allowance became dependent upon a means test of the income derived from the members of the household.
 
From the 4th October 1997, amendments were made to the Act in order to give a new meaning to the term 'Service Pension'. From this date, a service pension for social security pension assessment was only considered as long as the original rate of such pension was over Lm200 per annum and had not been wholly commuted. If this is the case then the service pension is taken at its original rate, that is when it was first received by the pensioner or the spouse in the case of a widows' pension.
 
As from January 1998 all differences between the conditions for entitlement to a widows/widowers pension were abolished. In fact, up to that date, a widower was only entitled to a Widowers' pension if he was not working and had, prior to his wife's death depended solely on her income.
 
This was not the case for a widow who could work and receive a social security pension at the same time. The new amendments eliminated this discrimination. The new amendments established that all the benefits applicable to a widow as regard to contributory benefits were to apply to a widower mutatis mutandis.
 
Another form of discrimination that was abolished with January 1998 amendments to the Social Security Act was with regards to the entitlement of sickness benefit. Up to the date of these amendments, the rate of sickness benefit payable to a married woman and a married man were completely different. Prior to the new amendments a married women could not be paid sickness benefit at the married rate as was the case for a married man. With the new measures, both a married man and a married woman become entitled to sickness benefit at the married rate as long as their spouse is not in gainful employment.
 
1998 

A major change in social security was taken when the responsibilities for the collection and enforcement of social security contributions was transferred on to the Commissioner of Inland Revenue.
 
1999

The Social Security contribution rate was increased to 9% and from January 2000 the rate was further increased to 10%. The contribution rate payable by employer remained unchanged at 10%.

2001

There was an increase in Fostering Child Allowance.

2004 

Upon Malta's accession to the European Union (EU), benefits no longer remained the sole right of Maltese people but citizens from all EU Member States, were also eligible.  Similarly, Maltese citizens who were eligible to benefits from the other EU Member States started benefiting from them accordingly under EU regulations.

2006 

The pensions reform is introduced with the aim of making the system more adequate and sustainable.  New ways of calculating the pension are introduced for persons born after 1951.  There was the introduction of a gradual rise in retirement age from 61 years for men and 60 years for women to 65 years for both men and women.  The contributory period was also gradually increased from 30 to 40 years.

2007 

Widows who remarry continue to receive pension at the minimum pension rate till 5 years after marriage.

2008

Retired pensioners can work irrespective of employment income.  

Minimum Rate of Children's Allowance given to all children irrespective of income.

2012 

The Senior Citizen Grant was introduced for those above 80 years of age and still living in the community.  

People benefitting from a Disability Pension could work and earn as much as the National Minimum Wage.

2013 

Child credits were introduced for persion purposes to those parents on unpaid career breaks to take care fo their children.  

Contribution credits were awarded to those persons who failed the means test when they applied for the Carer's Pension.  

The applicable age of the Senior Citizen Grant is reduced to 78 years.

2014 

The Disability Pension started being paid in full even when the beneficiary starts working or earns more than the National Minimum Wage.  

Elimination of the Energy Benefit voucher as entitlement started being directly deducted from the water & electricity bill.  

Widow Pensioners are now allowed to work with no limit to income earned.

Increase in rate of the Disable Child Allowance.  

Tapering of benefits introduced for those Social Security Non-Contributory beneficiaries who entered the labour market, earning the National Minimum Wage.

Tapering of benefits extended with changes for single parents on social assistance and working part-time.

2015

The In-Work Benefit introduced for low income couples and single parents who are in a gainful occupation and still have children who are below 23 years of age living in the same household.

Introduction of a bonus for persons who paid Social Security contributions but still did not qualify for the Contributory Pension. 
 
​​​​​Maternity benefit rate increased to the equivalent of the National Minimum Wage for self-occupied women.

The applicable age of the Senior Citizen Grant, lowered to 75 years.

Persons in employment aged between 59 and 65 years allowed the possibility to pay up to 5 years of social security missing contributions to qualify for a pension or better on their retirement pension.

2016

A guaranteed National Minimum Level of Pension of €140 per week awarded to those who have a full record of contributions.  Pro-rata levels for those with less contributions also introduced.

Full Widows Pension to widow/er who were eligible to the contributory pension in their own right but had to renounce it on partner's death.

In-work Benefit scheme extended to families where only one of the parents is employed.

Doubling of Social Security Credited Contributions for those on unpaid career breaks to take care of their children.

Social Security Contribution credits to partly cover study periods for persons with MQF Level 5 to 8 qualifications are introduced.

Rate of Pension paid from the day after retiring or the day after the passing away of one's partner.

Full Widow's Pension paid to widows eligible to a retirement pension in their own right and forfeited on spouse's death.

Incentives introduced for people who opt to remain in employment instead of retiring by awarding them percentage increase in their future pensions subject to the number of years they remain in employment.