Making good on Budget promises

Government starts implementing landmark Budget 2024 social measures, enhancing pensioners’ welfare and addressing historic anomalies.

December 2023 saw the implementation of some of the major social measures announced in the Budget for 2024.  This included:

– payments under the additional mechanism against inflation, which ranged between €100 and €1,500 per year;

– the first tranche of the increase of €250 per year per child in children’s allowance;

– the rise of €15 per week in the non-contributory age pension;

– the improvement of between €8.54 and €17.39 per week in disability assistance; and

– the raise of  €12.81 per week in carers’ allowances.

Contributory pensioners will be the main beneficiaries during January 2024, with the first group having received the increase due to them yesterday, Saturday 6th January. In total, the affected group make up around 63,500 persons. Their pension will be increased by €15 per week, the highest increase ever awarded to pensioners.

The rest of benefiting pensioners, who number around 31,000 – of whom almost 18,000 are widows or widowers – will be paid in the coming weeks. In particular, widows and widowers will receive their increases on the 13th January and those on the invalidity pension and the national minimum pension will be paid on the 20th January.

This pension increase will be the 7th in a row since 2018. This is in addition to substantial increases that were granted in 2016 and 2017 to pensioners on the minimum pension.

Pensioners today receive between 30% and 68% more than they received 11 years ago. Taken together, the average pension increase granted since 2013 totals €64.40 per week, or almost €3,350 per year.

Those on the minimum pension enjoyed even larger increases, totalling €84 per week, or almost €4,380 per year. In essence they are receiving the equivalent of almost 9 additional minimum pension payments when compared to 2013.

Other benefits

Besides these increases, several groups of pensioners have benefited from several other measures.  These groups include widows and widowers, pensioners who retired after 2008, service pensioners, pensioners who paid tax, and those who had 10 years of age contributions but were not eligible for pensions.

In 2024, a pensioner with a single person tax computation will not pay tax on the first €25,952 from pensions or other income, while someone with a married computation will not pay tax on the first €29,552 of their income. This means that a pensioner on a single person computation is saving up to €3,763 in tax this year while a pensioner with a married computation is saving up to €3,483 in tax.

The sum voted in this year’s Budget on all pensions, including the age pension, as well as the bonus payable during the year, amounts to €1,170 million. This represents an increase of €530 million, or almost 83%, on the corresponding cost in 2013.

Measures to improve pensioners’ welfare

There are several other measures that will be continuing to improve pensioners’ welfare. Those pensioners who retired after 2008 will continue to benefit from the process initiated in 2022 so that the cost of living bonus will start to be paid at the same rate to everyone. The highest improvement this year will be just over another €1 per week. This addresses an anomaly created by the pe-2013 administration.

Similarly, the process will also continue in order to gradually adjust the rate of widow/widower’s pension so that it is the same as that of their spouse rather than being one sixth less.

A new measure that is coming into force applies to widows and widowers who have not yet reached the age of 61: their pension will no longer be taxable.  It is also worth mentioning the tax exemptions for pensioners aged 61 and over who do not pay tax on almost €26,000 from pensions or other income in 2024.

Furthermore, those who choose to continue working instead of retiring will be able to benefit from an additional 1.5% increase for each year they continue to work.  Thus, the incentive rates will now be 6.5% for those who postpone receiving their pension by one year; 13.5% for those who continue to work for two years; 21% for those who postpone their pension by 3 years, and 29% for those who choose to remain in employment for 4 years.

Finally, it is important to mention two measures which will affect pensioners born before 1962. The first measure provides that, from this year onwards, every pensioner, irrespective of when they were born, will have the same increase when the overall budget increase is granted. This will remove an anomaly that would start affecting pensioners from this year onwards resulting from the 2006 pension reform.

The second measure concerns the maximum pensionable income of those born before 1962.  This income will start to increase at a faster pace until it gradually reaches that of pensioners born on, or after, 1962. Once again, this addresses an issue created under the pre-2013 administration.

Thanks to this measure, many pensioners who had salaries that were higher than the maximum pensionable income will benefit from an additional increase in their pension that can go up to €9.47 per week, depending on the amount of each individual’s pensionable income.

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