2022: A watershed year for social benefits

Social measures have been the hallmark of annual budgets presented by the Labour administration over the past 8 years; essentially addressed to create a better quality of life for young and old, families with children, pensioners, vulnerable persons and persons with disability. They aimed at promoting social activation and participation and at warding off people from the benefit and poverty traps.

The social narrative was at the heart of each of the budget speeches. But never as much as the budget speech delivered this year by Minister for Finance and Employment, Clyde Caruana. It was marked by a bumper package of social measures and initiatives, which in terms of expenditure outstripped previous budgets, prompting media commentators to brand Budget 2022 as a social budget.

Supplementary Allowance disbursed last weekend

The bulk of the outlay of €1.8 billion allotted to the Ministry for Social Justice and Solidarity, the Family and Children’s Rights will bankroll the package of social benefits. Their roll-out got underway last weekend with the advance disbursement of the enhanced Supplementary Allowance to about 29,000 married and single beneficiaries. 

Speaking at the launch of the measure, Minister Michael Falzon described it as “one of the keynote social measures in 2022” as it handsomely improves the rates payable to persons on social assistance and low-income pensioners and working persons who are either single or have no children under 16 years of age.

Through a revision of the benefit computation, married couples have been awarded yearly increases of up to €338 to a maximum of €1,098. The rates for single persons have been increased by up to €260 to a yearly maximum of €598.

Furthermore, the recipients of this benefit who are 80 years and over will henceforth be automatically entitled to free medicines.

€1 billion in pensions in 2022

During the launch of the measures roll-out, the payment schedule of the new pension rates due for January was announced. Non-contributory old age pensioners will be the first to benefit precisely at the turn of the year from the €5 weekly increase awarded to all pensioners. They will be followed in weekly intervals by retirees, widows and invalid persons.

This will be the fifth increase in a row since 2018, bringing up weekly increases to a total of €25.25. It is estimated that overall, the increases will cost €24 million, boosting the whole pension bill, together with bonuses, to a record of more than €1 billion in 2022.

Sizeable swathes of the pensioner population stand to benefit further from improved rates of between €2.50 and €5.00 weekly through gradual adjustments in widows’ pensions and in the cost-of living bonus that will be introduced as from next year. The new measures will set off a process over a number of years to establish equivalence in survivors’ pensions and a level playing field in the award of the cost-of-living bonus among all pensioners. Such increases will be over and above the across-the-board pension increases.

Other improvements envisaged for older persons will come on stream early in February and will include increases in the Senior Citizens’ Grant paid to those aged 75 and over and the Deficiency Contribution Bonus paid to persons who do not qualify for a pension despite having paid contributions in their lives.

The Making Work Pay concept has been at the heart of budgetary initiatives taken since 2014 to incentivise people to enter or re-enter the labour market and reduce benefit dependency. Within a framework of economic growth and the ensuing creation of job opportunities, the initiatives paid dividends, with the number of beneficiaries reliant on social or unemployment assistance have precipitated to record levels.

The In-work Benefit has been a key pillar in this policy. Since its inception, the terms of the scheme have been repeatedly upgraded to allow a wider range of parents in employment to boost their household incomes by partaking from a range of rates payable per child in the family under 23 years of age.

More income with the adjustment of tresholds

New rates and thresholds will come on stream once again during the incoming year. Married couples, single parents and single earner families with incomes below €26,000 or €35,000 will gain from an increase of €100 per child. At the same time, through the widening of income thresholds, married couples with incomes of up to €50,000 and single parents and single-earner households with incomes of up to €35,000 will become entitled to a payment of €200 per child. Up to 7,000 new households could possibly benefit from the broadening of thresholds.

A further innovation in the scheme would encompass private sector employees who work atypical hours and whose basic wages fall below the €20,000 mark. They will be awarded an annual grant of €150, equivalent to 10% of their income tax bill. It is envisaged that up to 40,000 employees could be entitled to the grant.

Other families with children stand to benefit from other new measures, in addition to the established children’s allowance and the child supplement which is being paid for the second year running. The child bonus introduced in 2020 to defray a family’s cost at childbirth or on the adoption of a child will be increased by €100 to €400.

The allowance payable to families with children suffering from a physical or intellectual disability is being increased up to €1,560 annually. The tranche for the first quarter of 2022 at the new rate was paid in advance on December 11.

TheJournal.mt is informed that the Department of Social Security and the Income Support and Compliance Division within the Ministry for Social Justice and Solidarity, the Family and Children’s Rights are planning to fully implement the bulk of the package of measures by the end of March (82% of the measures) and to attain full closure by November 2022.

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