The further enhancement of pensions was the hallmark of the notable package of social benefits enshrined in this year’s national budget.
For the fifth year running, besides the annual adjustment to make up for the rise in cost of living, contributory and non-contributory pensioners are being accorded increments in their pension rates.
Beneficiaries will totally pocket over €24 million beefing up the annual pensions bill to over €1 billion. The biggest share, amounting to more than €700 million, will be paid out to retirement pensioners who form the largest cohort.
The roll-out of the new rates got underway in the first week of the year with the non-contributory age pensioners being the first beneficiaries, followed by retirement pensioners.
According to the schedule of payments announced by the Ministry for Social Justice and Solidarity, the Family and Children’s Rights it will be the turn of widows this weekend to receive their enhanced rates.
Beneficiaries of invalidity pensions and the minimum guaranteed pension are lined up to get their improved rates as from the third week of the month.
The pension bill has been yearly on a steady rise partly due to the upward trend in the number of retired persons, but most importantly, as a result of the beefing up of the different pension rates in recent years.
Over the past 8 years the number of pensioners grew by 18.4% to reach over 97,500 in 2021. In the same period, the outlay on pensions and bonuses notably shot up by 44% or €281.7 million to reach over €922 million.
On average, the per capita income from pensions rose to nearly €9,500 in 2021, a rise of 21.7% over pension income in 2013.
Minister for Social Justice and Solidarity, Michael Falzon, attributed such an advancement to Government’s policy which particularly focused on pensioners to boost their incomes and quality of life through a string of pension increments.
The first increases, awarded in 2016 and 2017, were primarily targeted at married and single persons entitled to a contributory minimum pension and non-contributory age pension, who are at the lower tiers of the pension scales.
In the following years the increases were assigned across-the-board and applicable to both contributory and non-contributory pensioners.
Inclusive of this year’s weekly increase of €3.25, over a five-year period the increases amounting to €14.18 weekly, which annualized total €737.4. Aggregated to the cost-of-living adjustments over the same period pensioners’ incomes globally improved by €1,313.
Furthermore, widows and various cohorts of retirement pensioners stand to gain further improvements in their pension rates through two other key budget measures which will be enacted this year.
Widows will benefit from further enhanced rates through the first instalment of annual adjustments in their pension triggered by a measure aimed at gradually bringing widows’ pensions at par with the pension of their late spouses. About 12,000 widows are estimated to attain increases varying between €234 and €287 yearly.
The second budget measure has been designed to gradually create over a period of years a uniform rate of Cost of Living Bonus (CLBO) and redress the current imbalance in the rates payable to pensioners who retired after 2008.
The annual cost of living increase is split into two parts: two thirds of the rate is factored in the weekly pension rate and the balance is cumulatively added as a yearly bonus. Under the present regime, persons who retired in 2008 or earlier receive the highest weekly rate of CLBO, whilst other retirees draw lower rates depending on their year of retirement.
A new mechanism will kick start annual adjustments in the CLBO rates aimed at gradually closing the gaps with the top tier. This year’s adjustments will vary between €9 and €130 yearly, depending on the year of retirement of the pensioner.
All this is part of 28 social measures announced in Budget 2022 which are being implemented by the Ministry for Social Justice and Solidarity, the Family and Children’s Rights.
By the end of this month, 50% of these measures would be fully implemented.
The implementation rate will increase to 82% by end of March with a further 9 measures implemented, while full implementation of all the 28 measures will be achieved by the end of November.