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The History of Social Security in Malta

Social Protection in Malta

The development of social security services in Malta could possibly be traced back to the rule of the Order of the Knights of St. John over the Maltese islands. Although by the time the Knights came to Malta in 1530 they had evolved into a military order, as hospitallers they still devoted themselves to the care of the sick and poor. Besides defensive fortifications, they built a large-sized hospital in the new capital city and were engaged in a number of charitable bodies. They were actively involved in humanitarian activities to assist in cash or assist the poor and other deserving causes.

But it was not before the 19th century that the first-ever state sponsored social benefit was introduced in Malta. It took the form of a pension scheme launched in 1885 for police officers, and which a few years later, was extended to civil servants.

Legislative Initiatives

The first green shoots of a social policy network appeared in the twenties with the granting of self-rule by the British Government in 1921 in the aftermath of the First World War and the socio-economic hardship that came in its wake. The legislative programme included the granting in 1927 of pensions to widows and orphans of deceased public officers.

It was followed two years later by the first-ever social insurance scheme designed to compensate workers who suffered injuries on duty. Benefits were financed through a fund regulated by the Workmen’s Compensation Act. Contributions towards the fund were compulsory and equally shared by employers, employees and the State.

Political upheavals and the onset of the Second World War cut short the legislative programme, which, however, resumed in earnest with the restoration of self-government in 1947.

The first measure in August 1948 was the Old Age Pensions Act which provided for the payment of pensions to elderly persons who had never been in employment. Unlike the Workmen’s Compensation Act, the scheme was not funded through contributions, but claimants had to undergo a financial means test. It was followed a couple of years later with the advent of a scheme of financial assistance (colloquially known as Relief) for needy families whose head was unemployed.

Watershed Year

1956 was a watershed year for the social security system with the enactment of two major bills – the National Assistance Act and the National Insurance Act – and the concurrent creation of the Department of Social Security. Social and Medical Assistance were accorded to different categories of vulnerable people without having to pay any contributions. Heads of household – unemployed, in search of employment or unable to work because of ill-health – were granted social assistance. If beneficiaries were residing in a rented house their assistance was augmented by a Rent Allowance.

Persons suffering from a chronic disease became entitled to Medical Assistance, irrespective of their family’s financial resources. The legislation further introduced free institutional care for the aged, free hospitalisation and treatment in all State-run institutions and hospitals.

The Workmen’s Compensation Act was repealed and replaced by a law providing for a comprehensive scheme of social insurance financed through contributions compulsorily paid by employees, employers and the State. The scheme covered a wide range of benefits, allowances and pensions, besides contingencies covering sickness, employment injuries/diseases, unemployment, widowhood, orphanhood and old age.

A year later Government extended the provisions of the Old Age Pensions Act to visually impaired persons aged 40 years or over. The qualifying age in 1962 was lowered to 14 years to align it to the school-leaving age of the time.

The National Insurance Act was amended in 1965 to encompass self-employed persons and non-employed persons, thus bringing the scheme applicable to a broad spectrum of the Maltese population. In the same year Invalidity Pension was added to the string of social measures.

The Seventies

A host of innovative social measures were rolled out during the seventies. These comprised:

  • The elimination of the distinction between men and women in regard to contributions and benefits. (1971)
  • The introduction of the payment of an annual Bonus to all Social Security pensioners and recipients of Social Assistance. (1972)
  • The establishment of Children’s Allowances from which thousands of households and children benefitted. (1974)
  • A non-contributory Disability Pension was launched in the same year. It also covered persons suffering from a severe mental sub-normality or from cerebral palsy. In the following year the pension was extended to other categories of severely disabled persons.
  • Significantly, the Two-Thirds Pension came on stream in 1979, together with a pension scheme for widows calculated on their deceased husband’s earnings. The new schemes were supplemented by a reformed contributions system applicable to both employed persons and self-employed persons.
  • A National Minimum Pension was concurrently introduced to ensure persons claiming a contributory pension would not fall below a certain pension rate provided they had a full contribution record to their credit.

The Eighties

The decade was marked by the approval of the Social Security Act by the House of Representatives to comprehensively encompass the provisions of three separate laws governing Old Age Pensions, National Assistance and National Insurance into one legislation.

The measures which were rolled out in the eighties included the introduction in 1981 of the maternity benefit for self-employed persons and for unemployed females. The benefit covers the 8 weeks prior to confinement and the first 5 weeks after confinement. Maternity leave benefit is awarded to females opting for maternity leave through their employer and deciding to extend their maternity week by four weeks. The weekly payable rate is at par with the national minimum wage.

Social assistance was extended in 1986 to single or widowed females single-handedly taking regular care of an elderly or disabled relative.

The Disabled Child Allowance was created in 1988. It is paid to parents of children with a disability.

The Nineties

The decade was fertile with new or enhanced social measures:

Introduction of a Widower’s Pension and an Orphan’s Supplementary Allowance. (1991)

  • Unmarried or widowed persons taking care of a bed-ridden or wheelchair bound parent were accorded a Carers’ Pension. (1992)
  • A Supplementary Allowance started being paid to citizens whose total income fell below a certain level. (1996)
  • The Children’s Allowance scheme was reviewed and entitlement became subject to a means-test of the income derived by members of the household. (1996)
  • The meaning of the term ‘Service Pension’ was fined tuned. As a result, a service pension for social security pension assessment was only considered as long as the original rate of such pension was over €466 per annum and had not been wholly commuted. If this was the case, the service pension was 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. (1997)
  • The discrimination hitherto existing between men and women in the award of Widow’s Pension was eliminated. The amendments established that all contributory benefits applicable to a widow were to apply to a widower mutatis mutandis. (1998)
  • The amendments further eliminated discrimination in the grant of sickness benefit. A married woman hitherto did not qualify to the Sickness Benefit rate applicable to a married man. With the new measures, both married men and women were put on the same footing as long as their spouse was not gainfully employed.
  • In the same year, after more than four decades, the responsibility for the collection and enforcement of Social Security Contributions passed from the Department of Social Security to the Inland Revenue Department.
  • The decade closed with a revision of the Social Security Contribution rate for employees. It was increased from 8.33% to 10%.

Early 21st Century

Since the turn of the century, social protection has been invigorated by the activation of social reforms and benefit enhancements aimed at keeping the social security system abreast of changing social needs and challenges.

Furthermore, Malta’s accession to the European Union (EU) in 2004 social benefits became available to all citizens from other EU member states and reciprocally Maltese became eligible to benefits from other EU states.

Pensions

Given Malta’s ageing population, priority has been given to measures devised to strengthen the sustainability and adequacy of pensions.

The reform got underway in 2006 with the raise of retirement age from 61 years for men and 60 years for women to 65 years for both gender. Concurrently the contributory period has also been increased to 40 years while 10 years later it went up by another year for persons born after 1968.

In terms of sustainability, since 2016 adopted measures have been primarily designed to incentivize pensioners to remain active in the labour market beyond statutory retirement age and to ensure that, over time, a fair balance would be kept between contributions and benefits across generations. Employees in the private sector opting to remain in employment, now have the option to defer their retirement pension. In doing so, they stand to gain annual percentage increases in their pension rate, depending on how long they remain in employment (a maximum of 23% if pension is deferred for 4 years). In 2019 the incentive was extended to employees in the public sector as well.

In terms of adequacy, manifold measures have been implemented since 2016 to increase pensions across the board, to improve the living standards of elderly persons and toward them off the risk of poverty such as the following:

  • Pension rates have been increased across board for both contributory and non-contributory pensioners. Increases awarded in the period 2018 – 2022 globally amounted to €14.18 weekly or €737.4 annually. Taking into account the cost of living increases in the same period, pensioners benefitted from an annual total of €1,313. These apart from other increase which they could have benefitted from by virtue of other measures.

Weekly basic increases in € from 2018

Year Pension Increases Cost of Living Increase
2018 2.00 1.75
2019 2.17 2.33
2020 3.51 3.49
2021 3.25 1.75
2022 3.25 1.75
14.18 11.07
  • A Minimum Guaranteed Pension has also been set persons with a full contributory record. Increases have been given on a pro-rata basis to persons with insufficient contributions.
  • The level of the non-contributory means-tested Age Pension has also been increased.
  • Female employees have been granted care credits to compensate for periods spent raising and caring for their children, thus helping them to improve their pension coverage.
  • Similar credits have been introduced for periods spent in education. The higher the levels of educational attainment the greater the credits awarded.
  • Survivors qualifying to a contributory pension are now entitled to full pension of the higher between their own pension and the pension of their deceased spouse.
  • The gender gap in pensions has been addressed with females gaining increases in their weekly pension rates.
  • Persons born between 1950 and 1956 in employment and short of Social Security Contributions have been given the opportunity to pay for a maximum of five years from their missing contributions to qualify for a pension.
  • As from 2021, persons born before 1962 and who were in employment before reaching 19 years became eligible to a minimum retirement pension if they managed to reach the minimum contribution average through the inclusion of the social contributions paid whilst they were in employment before age 19 years.
  • In 2022, another category of persons in a similar situation but who had no paid contributons after January 1979 started qualifying for a pension under the same terms.
  • Pensioners are exempt from paying tax on income arising from any type of pension up to a set maximum. In 2022 the exempt threshold was set at to €17,918 for a married comptutation (of which €3,600 could be from any source) and to €14,318 for a single computation.
  • Service pensioners yearly benefit from higher income as a result of the grant of a €200 waiver in their service pension.
  • As from 2019, on reaching 72 years of age service pensioners became eligible to an abatement of 75%, instead of 50%, of their commuted part of the service pension for the purpose of their social security pension. Full abatement came into effect as from 2022.
  • Ex-uniformed personnel who on retirement from service take up another job in 2020 were granted the option to have their pensionable income assessed on the salaries earned when in the disciplined services, if more beneficial, instead of the last 11, 12 or 13 years of their employment as the case may be.
  • Widows have been given right to full pension irrespective of their earnings from employment or their children’s age.
  • Through a process started in 2022 the pension of widows, who in their own right are ineligible to a retirement pension, are being adjusted to gradually reach the full pension entitlement of their deceased spouse.
  • Another process was launched in 2022 to gradually phase in a uniform cost of living bonus (CLBO) for pensioners who retired after 2008 thus eventually eliminating the disparate rates of CLBO between retirees in 2008, or earlier, and retirees in subsequent years. When completed, the readjustment will create a level playing field for all pensioners.
  • Contributions paid by pensioners who continued to work after reaching pensionable age are taken in consideration in the computation of their pension as from the age of 65 years.
  • In 2019 the applicability of the pension assessment for employees who benefitted from early retirement schemes has been extended to employees who opted to such schemes prior to January 2008. Previously, entitlement to such an assessment was restricted to employees who took up early retirement after January 2008.
  • A concession was given in 2019 to persons who worked in Libya after January 1990, and who were adversely affected by changes in the Social Security Bilateral Agreement between Malta and Libya. Such persons were able to regularize their position by providing documented evidence of payment of contributions in Libya or by being able to pay up to 10 years of missing contributions in Malta.
  • Atypical workers with multiple part-time jobs were given the option in 2022 to pay social security contributions on more than one job up to a weekly maximum of 40 hours. They would thus be in a position to qualify to a higher pension rate on their retirement.

Making Work Pay initiatives

The package of active labour market initiatives was rolled out in 2015 to incentivise social beneficiaries and women to enter the labour market. The package comprises the In-Work Benefit scheme and the Tapering of Benefits.

In-work Benefit

The In-Work Benefit scheme is targeted to improve the situation of low-to-medium income households where married couples (both or one of them) or single parents are in employment and have dependent children up to 23 years of age. Benefits are calculated on net income from employment and eligibility does not impinge on the entitlement of families to Children’s Allowance. The payable rates and income thresholds were revised and enhanced in 2022.

  • For couples, where both work, the threshold has risen from € 35,000 to € 50,000
  • For working single parents, the threshold has been raised from € 23,000 to € 35,000.
  • For couples where one parent works the threshold has risen from € 26,000 to € 35,000.

The rates in the new thresholds are € 200 per year per child; while all existing rates increased by € 100.

A new benefit was introduced in the scheme in 2022 in the form of a yearly payment of €150. It is applicable to workers in the private sector, who basically earn less than €20,000 annually and are engaged to work in the evenings, in the weekends or on shift basis.

Tapering of Benefits

The Tapering of Benefits scheme job is designed to wean off persons from unemployment and social benefits and provide them with greater security when they take up a job. Besides eliminating the risk of persons falling into the dependency trap, the initiative paves the way for a beneficiary to invest in a future contributory pension through the payment of Social Security Contributions.

Under the scheme, beneficiaries are allowed to retain part of their social benefits when they up a job. In their first year in a job they retain 65% of a benefit, and 45% and 25% in the following two years. Over the same period, their employers are assigned 25% of the benefit.

Both schemes have been a notable success in encouraging persons on social and unemployment assistance, mostly single parents, to find employment. Coupled with the free Child Care programme, they have contributed to push up the participation of women in the labour market.

Persons with a disability

Even persons with a disability have found it easier to find a job. Their employment was facilitated through fiscal incentives offered to employers and through the enforcement of a law enacted in 1969 to reserve 2% of the manpower of companies with more than 20 employees to persons with a disability.

At the same time, persons with disability in employment and earning more than the minimum wage have been given the right to retain their Disability Pension.

Furthermore, the Disability Pension has been reformed, primarily to assist persons who because of their disability could never be in a position to be gainfully occupied and have the opportunity to supplement their pension with income from employment. These persons are now entitled to the highest rate of allowance. In 2019 the allowance was increased from €140 to €150 per week, paving the way for the next stage of the reform which envisages the setting of the allowance at par with the net National Minimum Wage. The reform was concluded in 2020 with the award of a weekly increase of €11.40, putting benefit at par with the net National Minimum Wage.

Besides the Barthel Index, which applies to persons with mobility problems, an Impairment Rating Evaluation was introduced in 2019 to widen the eligibility parameters to other forms of severe disability.

The same reform has removed the bar to a Disability Pension for persons who, although missing one arm or leg, were not considered eligible at law.

On reaching pensionable age persons with a disability are entitled to a pension equivalent to the Non-Contributory Retirement Pension.

Severely invalid persons are entitled to the Increased Disability Allowance, equivalent to a net National Minimum Wage, if they are certified by a doctor and have attained the highest score on the Impairment Tables.

The grant on specialized equipment used by persons with disability in 2020 was increased by €400 to a maximum of €1,000.

The eligibility criteria to qualify for Disability Assistance were broadened in 2020 to embrace persons who are permanently deaf or permanently mute. An applicant who is medically certified to be totally and permanently mute or deaf to a degree of no less than 70 decibels, and who qualify for the Disabled Child Allowance, would qualify to the Disability Assistance on reaching 16 years.

Criteria were again widened in 2021 to enable persons with severe dfisabilities and intellectual impairment to qualify for the Increased Severe Disability Allowance if they could not be gainfully employed.

In 2022, every disability assistance started being granted solely on medical aspects and not subject to a means-test.

In the same year, a new benefit, known as the Carers’ Grant, was introduced for parents who have to stay at home to take care of a son or daughter with a disability over 16 years of age and in receipt of an Increased Severe Disability Assistance. The annual grant which was originally set at €300 was increased to €500 in 2022.

Elderly

  • A Senior Citizen Grant of €300 was introduced in 2012 for elderly persons, aged 80 years and over, residing in their own residence or with relatives. The eligibility age was lowered to 75 in the following year.
  • In 2020 the grant was increased by €50 to €350 for persons aged 80 years and over. It was further increased to €400 in 2022.
  • In the same year, elderly persons paying out of their pocket to reside in private residential homes became eligible to the Senior Citizen Grant.
  • An annual grant started being paid to persons with a deficient record of Social Security Contributions in 2015. Thousands of persons, mostly married women, have benefitted from the bonus. Over the years the bonus rates have been gradually upgraded and from the initial rates of €100 for persons with between 1 year and 4 years of paid contributions and €200 for persons with 5 years or more of paid contributions. In 2022 these rates were increased to €400 and €500 respectively.
  • As from 2020 beneficiaries became entitled to retain the bonus on reaching 75 years.
  • To encourage elderly persons to continue living in their own homes and community, a reform was undertaken in the Carers Pension and the Carers Allowance. The Pension is now known as the Increased Carers Allowance is payable to carers, including spouses, taking care of persons with a high level of dependency. The Carers Allowance is intended for carers of persons with medium level of dependence. In both cases, payable rates have been considerably enhanced, and the means test is no longer applicable in the award of the Increased Carers Allowance. If a married beneficiary of this allowance forfeits the right to entitlement to another social benefit an additional weekly allowance is allowed to every other member in the family. (2017 – 2018)
  • The conditions were further enhanced in 2019 to exempt applicants for both allowances from undergoing a means test. Married persons living in the same house with an elderly person became eligible to receive the Allowance for Carers until they reached their pensionable age.
  • In 2021 the eligibility criteria were widened to allow persons in retirement or in receipt of a pension to qualify for both allowances, subject they undergo periodical medical examination to assess their physical and mental suitability to impart care. Spouses, however, remain excluded.
  • Married couples and single persons, including pensioners, with low incomes benefit from reform of the Supplementary Assistance which entailed higher rates and the raising of the income ceiling for married persons to qualify for the benefit. (2017). In 2020 the additional yearly allowance payable to single or married persons aged 65 years and over was increased by €50 to €150.
  • The subsidy paid to elderly persons residing at home to employ a Carer at Home of their choice on a full-time or part-time basis introduced in 2017, was increased by €709 to €6,000 in 2021 to better cope with their financial obligations.
  • Elderly persons residing at home and on the waiting list to enter a residential home can avail themselves of an annual subsidy of up to €5,200 if they choose to employ a carer at home. (2017)
  • Married couples and single persons, including pensioners, with low incomes benefit from reform of the Supplementary Assistance which entailed higher rates and the raising of the income ceiling for married persons to qualify for the benefit. (2017). In 2020 the additional yearly allowance payable to single or married persons aged 65 years and over was increased by €50 to €150.
  • To further boost the disposable income of eligible households to the Supplementary Assistance the assessment mechanism was revised in 2021 to increase the rates applicable to married and single persons. The maximum allowances were increased by up to €108 for married persons and by €70 for single beneficiaries. At the same time, the yearly allowance payable became applicable to all beneficiaries over 65 years old, whether at risk of poverty or not.
  • The enhancement of the Supplementary Assistance rates resumed in 2022 with across the board increases for married couples and single beneficiaries. The weekly rates for married couples with incomes up to €14,318 vary between €3.47 and €6.50. For single persons the new weekly rates vary between €4.10 and €5.00.
  • Supplementary Assistance beneficiaries aged 80 years and over as from 2022 became automatically entitled to free medical aid (Pink Card) without the need to undergo a means test.

Widows

  • Widows in employment and in receipt of a contributory pension have been extended the right to benefit from Sickness Benefits. (2018)
  • Widowed pensioners with children under the age of 18 years in 2020 became eligible to an increased rate of allowance per child, irrespective of whether they are in employment or not. The weekly allowance was increased by €5.46 to €10.
  • The Social Security Act amended in 2021 to update the interpretation of a widow to validate the right of the surviving spouse in a civil union or cohabitation to be recognized as a widow/widower, if it is proven that the civil union or cohabitation could not be contracted and registered because one of the partners passed away between 1st January 2017 and 31st December 2020.

Families and children

  • The Maternity Benefit rate increased to the equivalent of the National Minimum Wage for self-employed women. Maternity Leave entitlement has been extended by a further 2 weeks to 18 weeks. (2013)
  • Adoptive parents eligible to Leave Benefit on the same lines as Maternity Leave. (2015)
  • Grant of €10,000 introduced to support adoptive parents to defray the expenses in their quest to adopt children from abroad. (2018). The grant was extended in 2021 with a maximum capping of €1,000 to couples adopting Maltese children.
  • The minimum annual rate of Children’s Allowance increased from €350 to €450 for each child. At the same time heads of family on minimum wage became eligible to the highest rate of Children’s Allowance. (2013)
  • Children’s Allowances payable to means tested families were increased in 2019. The highest payable rate went up by €96 to €1,252. This was the first such increase since 2008.
  • The Children’s Allowance scheme was further enhanced in 2021 with the introduction of an additional supplement for all children under 16 years. Families with reckonable incomes below €25,318 were awarded a supplement of €70 per child; and for those with incomes exceeding the supplement amounted to €50 per child.
  • A Child Bonus of €300 was introduced in 2020 for families of new-born babies or adopted children. The bonus was increased to €400 in 2022.
  • Parents who are constrained to cease work to care for children suffering from rare ailments qualify up to 8 years of credits in their National Insurance contributions. The concession which became effective in 2020 is intended to ward them off gaps in their contribution record and thus minimize the prospect of having a reduced retirement pension.
  • The weekly Foster Care Allowance was further increased in 2010 and 2018 to reach €100 per child. It was again increased in 2021 by €20 weekly and foster parents are now eligible to an annual allowance of €5,720 per child in their care.
  • Orphan’s Allowance extended to orphans in employment. (2018)
  • The Disabled Child Allowance payable to parents of children suffering from some form of physical or mental disability was increased in 2014 from €16.31 to €20 per week. The weekly allowance was further increased to €25 in 2019 and €30 in 2022.
  • Single parents are given the opportunity to concurrently benefit from the payment of Social Assistance and a stipend when they take up post-secondary studies. The payable amount of social assistance and the stipend however cannot exceed the national minimum wage. In 2019 this concession was extended to social assistance beneficiaries over the age of 23 who decide to take up studies at the Malta College of Arts, Science and Technology or the University of Malta.

Other measures

  • Drug Addicts Allowance twice increased to help affected persons pursuing a rehabilitation programme for drug or alcohol abuse. (2016 and 2018)
  • In 2019 self-employed persons have historically been extended the right to receive unemployment benefits if they cease their activity and start registering for work, putting them on the same footing as employed persons.
  • Married couples suffering from chronic illness and in receipt of the non-contributory Medical Assistance became eligible to a weekly increase of €5.14 in 2019.
  • Means test mechanism reformed to create a single threshold for all Non-Contributory Assistance, including the Pink Card. (2017)
  • Elimination of discrimination between males and females in the benefit rates payable under the Social Security Act. (2016)
  • The Social Security Act provides for the payment of Medical Assistance to the head of household subject to a means test. An amendment in the legislation in 2019 gave recognition as of heads of household to children caring for their parent/s and in receipt of the Increased Carers’ Allowance or the Carers’ Allowance, if they applied for medical assistance.
  • Also, in 2019 all persons suffering from bipolar, depression by psychosis and terminal illnesses were granted the right to medical assistance if they satisfy the means test criteria.
  • In January 2020 ME and Fibromyalgia were added to the list of medical conditions eligible for Sickness Benefit, subject to applicants satisfying a means test and undergoing a medical assessment by a multi-disciplinary board.
  • Persons undergoing continual treatment for particular medical conditions, such as cancer, in 2020 became qualified to Sickness Benefit from the first day of their repeat claim for the benefit.
  • Severely Invalid Persons who have the maximum contribution average on qualifying for Invalidity Pension from 2020 became entitled to the same level of benefit the Increased Severe Disability Assistance, which is equivalent to the net Minimum Wage. Persons with a lower contribution average started being paid a pro-rata of the maximum benefit.
  • In 2022, Disablement pensioners started to qualify for full entitlement of injury, sickness or unemployment benefits without any deductions.
  • Social assistance beneficiaries as from 2022 became eligible to the full annual COLA increase, and not two thirds of the increase as was previously the case.

Social Security Department Logo

The logo for the Social Security Department was unveiled on the 30th of May 2016 to commemorate the 60th anniversary of social security in Malta.

The logo designed by Andreas Azzopardi is inspired by a wish for Children to come first, and for equality between adults.

Previous Social Security Logo