Information about Contributory Pensions Reform

Contributory Retirement Pensions

Contributory retirement pensions can be divided into two schemes, the flat rate pensions and the two-thirds pensions. 

The flat rate pensions are awarded to pensioners who also receive a service pension and to pensioners who have a low pensionable income. The two-thirds pensions are awarded to all other pensioners. 

A full retirement pension requires a yearly average of at least fifty (50) contributions from 1956 or from age nineteen (19) (whichever occurs later) and/or from age eighteen (18) if born after 1958 up to the last full year prior to the year of retirement. 

As per the Pensions Reform Report of 2010, with effect from January 2014, the pension age has increased to sixty-one (61) years for both males and females and the accumulation of contributions for a full two-thirds pension has increased to thirty-five (35) years. 

For those pensioners who were in receipt of a pension before 2006, at the time were entitled to a one-time grant which was incorporated to the rate of pension and is still being paid for every coming year. 

Statutory Pension age is as follows:

A person can opt to retire at age 61, provided he/she is not in any gainful occupation and has paid the stipulated contributions between age 18 and date of retirement as follows:

Pension Increases and Financial Enhancements

For 2026 all pensions increased by €10 weekly, equivalent to €520 per year, consisting of:
– €4.66 Cost of Living Adjustment (COLA).
– €5.34 additional increase.

Reform of Maximum Pensionable Income (MPI)

Beginning in 2024, a gradual transition was initiated towards a single Maximum Pensionable Income (MPI), applicable to all pensioners, regardless of birth year. Under this framework, pensioners born before 1962 whose calculated salary meets or exceeds the current MPI now have their pension revised to be in line with the new rate. The MPI thresholds for pre 1962 pensioners are being raised at a faster rate, so that over time they will align with the MPI of pensioners born in or after 1962.  The MPI for pre-1962 pensioners have increased as follows:

MAXIMUM PENSIONABLE INCOME	PENSIONERS BORN BEFORE 1962	PERSIONERS BORN AFTER 1962
2026	25,500.00	29,083.36
2025	23,500.00	28,303.36
2024	22,000.00	27,679.35

The Retirement Pension Measure for those Born Before 1962 (Additional Summary) 

This Measure is related to the Maximum Pensionable Income (MPI) of persons born before 1962 and is designed to gradually bring their MPI in line with that of pensioners born in 1962 and afterwards. 

Pensioners born before 1962 whose MPI in January of this year reaches €25,500 stand to gain an additional pension increase up to a maximum of €15.64 weekly, excluding the weekly €10 Cost of Living increase, depending on the pensioner’s updated pensionable income in 2026. 

The pensionable income represents the average salary on which a pension is computed. 

Pensioners whose updated pensionable income in 2026 stands between €23,501 and €25,499 will benefit from a pro-rata increase of €15.64.  However, pensioners whose updated pensionable income is less than €23.500 in 2026, are not entitled to a further increase other than the Cost of Living. 

This budget measure is also applicable to self-occupied persons provided that their declared income was higher than the Maximum Pensionable Income applicable at the time of their retirement.

Retrospective Payment of Social Security Contributions

Individuals aged between 59 and 64, who are residents of Malta, registered under the Social Security Act, and engaged in gainful employment may pay missing contributions to improve their contributions average for a better prospective pension rate.

Starting in 2026, being employed is no longer required when making Social Security contributions solely to meet the minimum of 10-year eligibility threshold for the retirement pension.

Child-Rearing Credits

Child credits recognise periods where parents reduce or stop work to care for their children.

Credits by Parent’s Year of Birth:

Born 1952–1961:

• Two (2) years per child (up to three (3) up to age six (6)
• From fourth (4) child: one (1) year each
• Disabled child: four (4) years

Born 1962 onwards:

• Four (4) years per child (for the first three (3) children).
• From the fourth (4) child onwards: two (2) years or pro-rata.
• For a disabled child: up to eight (8) years.

Recent Improvements

• As of 2024: Credits are granted regardless of pre-birth employment.
• Fathers eligible on equal terms when they stop working to care for children.

By means of a 2026 Budget measure:

• Credits extend to the child’s 10th year (first three (3) children).
• Fourth (4) child covered to age eleven (11); fifth (5) to age twelve (12)
• No upper age limit for children with disabilities or rare diseases.

Completion of a Rehabilitation Program Incentive

Those completing approved drug rehabilitation programmes and later obtaining permanent employment will benefit from:

• Four (4) years of credited contributions, and
• Two (2) years employer Social Security Contribution exemption.

Incentives for persons keeping their employment beyond their Pension Age

This is the first step that the Government of Malta took and was initially an incentive open to workers in the private sector and self-occupation but later extended to the public service and public sector as follows:

* without claiming their retirement pension at the retirement pension age

Those opting to postpone their Retirement Pension award for more than one year, will have their pension percentage increase accumulated as follows:

* without claiming their retirement pension at the retirement pension age.

The percentage pension increase is cumulative and will be paid till date of pensioner’s demise.

The percentage pension increase will be payable to all eligible persons in receipt of a Contributory Retirement Pension who satisfy the above conditions including those in receipt of the Maximum Two Thirds Pension.

The percentage increase is payable apart from other pension increases, included Cost of Living Increases.

The percentage increase is transferred in the case of a Widows Pension.

Further information

The Incentives for persons keeping their employment beyond reaching sixty-one (61) years of age or their Pension age, came into effect from 1^st January 2016 for the private sector and self-occupied persons, and with effect from 1^st January 2019 it was extended to public service/sector employees.

Therefore, a person who was eligible for a Contributory Retirement Pension at least at age sixty-one (61), but opts to claim his / her pension at least with a one year deferral, will benefit from the mentioned pension percentage increases. This increase will accumulate yearly as the pension award date is postponed. An employed person that opts to retire after their statutory pension age, needs to make an agreement with his/her employer.

Hereunder are three examples that will help in explaining this new incentive (assuming that the cost of living increase will be €1.75 weekly).

1. A person entitled to a contributory pension of €8,000 per annum (€153.84 per week) at age 61.

Therefore, if a person who is entitled to a contributory pension of €153.84 per week at age 61, continues employment till age 65 and thus claims his/her pension at age 65, would have his pension entitlement increase to €198.45 per week, a net increase of nearly €44.61 weekly.

2. A person entitled to a contributory pension of €9,500 per annum (€182.69 per week) at age 62.

Therefore, if a person who is entitled to a contributory pension of €182.69 per week at age 62, continues employment till age 65 and thus claims his/her pension at age 65, would have his /her pension entitlement increase to €2221.05 per week, a net increase of nearly €38.36 weekly.

3. A person entitled to a contributory pension of €11,500 per annum (€221.15 per week) at age 63.

Therefore, if a person who is entitled to a contributory pension of €221.15 per week at age 63 and continues employment till age 65 and thus claims his/her pension at age 65, he would have his pension entitlement increased to €251.01 per week, a net increase of nearly €29.86 weekly.​

Non-Contributory Age Pensions

Unemployed persons who are residents in Malta, over sixty (60) years of age and do not qualify for a contributory retirement pension because they do not have the minimum number of contributions paid or credited, may be entitled to a Non-Contributory Age Pension if they satisfy the capital and income means test.

Invalidity Pensions

Contributory invalidity pensions are awarded to persons who have at least paid two-hundred and fifty (250) contributions and are suffering from a medical condition which according to the medical board of the Social Security Department renders them as permanently incapable for any full-time and/or any part-time employment.

Such persons must be incapable for work (suffering from their medical condition) for at least six months prior to their claim and in continuous employment and/or registering for work on the Part 1 register held by Jobsplus for at least one (1) year.

There are eight rates of Invalidity Pension according to the yearly average of contributions paid and/or credited and the civil status of the claimant. These rates are not related to the salary earned while in employment.

As of 2026, applicants with the highest degree of disability, who previously received benefits equivalent to the national minimum pension, will instead receive an amount equal to two-thirds of the pension they would have been entitled to upon retirement.

In specific cases, it will also be possible to engage in gainful employment while receiving an invalidity pension, subject to strict supervision by a medical specialist. Such cases include individuals with bipolar disorder or depression who have been undergoing treatment for at least three (3) years and whose condition has been certified by a psychiatrist employed as a public servant.

Widows Pensions

Contributory widow’s pensions are awarded to widows whose spouse had paid an average of 15 contributions during their lifetime. It may also be payable in cases where the late spouse died as a result of a personal injury during the course of their employment or self-occupation duties.

A widow’s pension is also payable in full without any deductions if widow is carrying out a full-time gainful occupation and, where a widow re-marries, a flat rate widow’s pension will be due.

Tax Advantages for Pensioners

• Single Rate: Non-taxable threshold rises to €18,552.
• Married Rate: Non-taxable threshold increases to €22,152.
• From 2026: Pensioners will receive a 100% tax rebate on any additional income up to €18,552.

These incentives safeguard pension increases from taxation and boost retirees net income.

Service Pension Enhancements

• Abatement increased to €3,866 in 2026.
• Full commutation amount becomes exempt at age 72.
• Since 2024, these exemptions apply automatically once 12 years have passed since the first award of State Pension.

Increase in Pension with Top‑Up for Beneficiaries of any Disability Pension

• As from 2025, beneficiaries who were receiving any disability assistance, whether still in employment or not, will have their disability assistance stopped. However, they may receive an increase in their pension when they retire.
• This increase ensures that the contributory pension rate reaches at least the National Minimum Wage, with a minimum top‑up of 10% of the disability entitlement before retirement.
• The pension will be increased up to the National Minimum Wage (NMW) according to the average of contributions, or a 10% top‑up will apply where the entitlement exceeds the NMW.
• The top‑up is calculated based on the person’s average contributions as shown in the table below: 

Contribution Average	NMW (€)
50–52	221.78
40–49	213.02
30–39	197.01
15–29	184.32

Living Abroad

Maltese Citizens living in Australia/Canada/New Zealand

In order for Maltese nationals residing in Australia/Canada or New Zealand to claim a Maltese pension, they should lodge a claim through the social security institution of either country.

Maltese Citizens living in European Union Countries

In order for Maltese nationals residing in an EU country to claim a Maltese pension, they must essentially lodge a claim through the social security in their country of residence. If the persons concerned had been insured in their country of residence, they should lodge a claim through the social security of the same country. If the Maltese nationals concerned, reside in an EU country but never worked there, the application should still be lodged through the social security of the same country. The claim will then be forwarded for processing to the Social Security Department of Malta by that same country of residence.​

Maltese Citizens Residing in a Third Country

In order for Maltese nationals residing in a Third Country to claim a Maltese pension, they should lodge an application directly with the Department of Social Security. This can be done either by downloading the claim forms from the website Social Security site and sending them by post or by lodging a claim physically while on holiday in Malta. Claim forms for each type of pension can be downloaded from this website and selecting the appropriate section.​​