SOCIAL SECURITY for women Joe Camilleri – Director General (Social Security) May, 2010

What shall we talk about today? Concepts of social security Looking at principal elements towards entitlement to benefits A focus on retirement & Widows’ Pension Some statistics and conclusions for a gender perspective

Social Security Benefits (1) Contributory Benefits: The contributory scheme in Malta is a system where an employee or self-employed person pays a weekly contribution as laid down by the Social Security Act. The National Insurance paid during the period that one is gainfully active is used to finance contingencies that may arise such as sickness, unemployment or retirement when occurs.

Social Security Benefits (2) Non-Contributory Benefits: This scheme which originally was meant to cater for those below the 'poverty line' has over a period of years evolved into a comprehensive scheme with a number of provisions that are intertwined in such a way that one type of benefit supplements another. This has made possible the allocation of more than one benefit at the same time thus providing simultaneous coverage in those cases where more than one contingency is present.

Contributory Benefits Pensions in respect of Retirement Pensions in respect of Invalidity Pensions in respect of Widowhood Orphan’s allowance/Supplementary Allowance Benefits in respect of Industrial Injuries and Gratuities Unemployment (Special) Benefit Sickness Benefit Marriage Grant Widows’ Re-Marriage Gratuity

Non-Contributory Benefits (1) Children’s Allowance Age Pension Carer’s Pension Blind Pension Disability (Severely) Pension Social Assistance Social Assistance Females Social Assistance Drug Addicts Social Assistance Single Unmarried Parents Unemployment Assistance Social Assistance Board

Non-Contributory Benefits (2) Sickness Assistance Milk Grant Maternity Benefit Leprosy Assistance Tuberculosis Assistance Supplementary Allowance Energy Benefit voucher Free medical aid

Contributory Pensions…….. 1.Are due following the payment of social security contributions 2.Are due on the basis of a contribution test apart from other statutory conditions 3.Are generally long-term benefits

Contributory Test……… A contribution test is a test that establishes whether a person has paid or been credited with sufficient contributions to qualify for a contributory benefit

Contribution Average Test…. Normally two tests are carried out and an insured person has to qualify both. First Contribution test checks whether a minimum amount of contributions has been paid Second Contribution Test checks whether over a period of time a sufficient amount of contributions have been paid

Other contributory conditions…. Contribution tests are just one side of the coin, other conditions may apply such as: age Earnings from employment (In the case of widows) Death of a spouse as a result of a work- related injury marriage (with respect to derived rights) Widowhood Dependant children

€ € € € € € € Let’s focus on pensions How will my pension be worked out? What are the essential elements of a pension entitlement? Are there any differences between a man and a woman’s pension entitlement?

2.Pension Assessment – Retirement Pension

Pensions in respect of Retirement - 1 Payable to any insured person who reaches retirement age (Current) Pension age – 61 (Men), 60 (females) Rate of pension - earnings-related (2/3rds of Pensionable Income) There are maximum and minimum pension rates applicable

A Contributory Pension Depends on A contribution test Pensionable Income Service Pension entitlement (if any) Defines the proportion, i.e. 2/3rds or less Defines the amount on which the proportion is to be applied

The contribution test Is normally made up of two tests, the first test establishes the minimum contributions required by law for a person to be eligible to apply for the pension whilst the second test is an estimation of the average contributions paid over a specific period defined by law.

The Contribution Test (cont’d) Essentially the second test is an arithmetic calculation as already defined which determines the proportion of the full rate pension applicable (according to the pension and pension type). This contribution average calculation therefore varies according to the Pension type.

In the case of a two-thirds pension The test covers a period of thirty years, broken down in two periods, namely: - The average of the contributions paid or credited during the last ten calendar years preceding retirement, and The average of the contributions paid or credited during any 20 years prior to the last ten calendar years preceding retirement

In the case of flat rate pensions such as the National Minimum Pension The contribution test can cover over thirty years and in fact spans a period: - That starts from the1st February 1965 or the on which the person reaches the age of 18 (whichever is the earlier and, Ends on the 31 st of December of the contribution year immediately before the year in which the person retires

A full pension is paid where your resultant contribution average was 50 or over. If the resultant contribution average was less than 50 then a reduced pension is paid accordingly.

Retirement Pension for a widow A widow/widower applying for a retirement pension on the basis of personal contributions may opt to have the contributions paid by their deceased spouse added on to their contribution payments; The average contributions which would have been calculated in respect of a widows’ pension entitlement will be the amount of contributions that will be considered for the period falling before the husband’s death

The Pensionable Income Is the amount on which your earnings- related entitlement will be assessed. It is a calculation over a specific period of your income or salary. The period taken varies according to your insurability status

Pensionable Income Employed In the case of an employed person, the pensionable income is the average of the best three consecutive calendar years and on which the RELEVANT CONTRIBUTION WAS PAID during the last ten calendar years preceding retirement

Pensionable Income Assessment – employed person YearBasic Wage € Col inc € Updated PI € Average of best 3 years €

Service Pension According to the Social Security Act, a service pension is a pension or other regular payment being made by a former employer of the insured persons in respect of past services, in Malta or abroad. Typical service pensions are those paid to ex-British Service personnel or ex-Civil servants in Malta.

At what rate is a service pension considered for social security purposes? For social security pension purposes, the service pension is considered: - 1.At the original rate on an un-commuted basis, as long as this original rate is greater than €466 per annum, and 2.As long as this pension has not been wholly commuted 3.An amount of €666 of the original rate is also not considered.

Pension rate assessment Contribution Average 2 x AC (50) 3 x Pensionable Income Service Pension0 Social Security Pension per week = PI x Cont Average less SP 52 €104.70

OK, but after all this mambo jumbo, what is the rate of my pension? “Elementary my dear Watson!!!” (AC/50 * 2/3 * P.I. - SP)/52 Now that was simple wasn’t it???

But …... There is a maximum rate of pension payable, and Also a minimum rate, ….. The Maximum and Minimum rates (2010 rates) are as follows: - Maximum Two-thirds = € per week (€11, per annum) *Minimum rates – Married € per week or Single € per week * Where the contribution average is 50. Where the contribution average is less than 50, then the minimum rates can be less than indicated above.

But a pensioner is also…. Entitled to €3.12 per week additional bonus (2/3rds of the March and September bonus), and Two 6-monthly installments of € each representing the bonuses for June and December

And also... Every year, the pension rate is increased 2/3 rds of the cost of living increase generally awarded by Government; and The other 1/3 rd of the cost of living is paid as a Cost of Living Bonus at the beginning of the year (this year the maximum amount being paid is € per annum or €4.47 per week*) * amount can vary according to the date when the pensioner retired.

Total Pension (our example) Weekly Pension rate€ Additional Bonus (weekly) €3.12 Six Monthly Bonus per week €5.20 Cost of living Bonus€4.47 Total per week€ Or Per annum€6,109.48

Does a pension rate increase? Retirement pensions are revised annually with effect from the first Saturday in January of each year. The minimum increase is the cost of living increase awarded generally by Government; and In the case of ex-employed persons, by two-thirds of any additional increase over and above the cost of living increase awarded by Government

Example of pension review Current Salary as on date of review (i.e. First Saturday of the year) € Highest Salary taken for the original Pensionable Income € Difference€ New Pensionable income is equal to Original Pensionable income + difference €

Revised Pension rate assessment Contribution Average 2 x AC (50) 3 x Pensionable Income€ Service Pension0 Social Security Pension per week = PI x Cont Average less SP 52 €117.85

Total Revised Pension (our example) Weekly Pension rate€ Additional Bonus (weekly) €3.12 Six Monthly Bonus per week €5.20 Cost of living Bonus€4.47 Total per week€ Or Per annum€

Retirement Pensions - Statistics Statistical Data for 2009 Number of Pensioners – 52,416 (an net increase of 2,719 pensioners over 2008) Expenditure:- € 319,506,964 (48.27%of total Social Security Expenditure) (an increase of € 25,516,474 in expenditure over 2008)

3.Widow/Survivor Pension

Pensions in respect of Widowhood.. Payable to the surviving spouse of a married couple Contribution test – same as that for a retirement pension Rate of pension is earnings-related (5/6ths of deceased spouse’s 2/3rds entitlement) There are maximum and minimum pension rates applicable Rates of pension can be increased in the case of dependant children under 18 years

Pensions in respect of Widowhood.. A widow (under pension) can retain her widow pension if she is working and earning less than the equivalent of the National Minimum wage, however: - In the case of a widow over pension age or who has the care of children under 21 years of age, the right to the widows pension is not lost if she is gainfully employed although in the case of a widow with children over 16 but under 21 earnings over the National Minimum wage may affect her widows’ pension rate by the amount exceeding the equivalent of the national minimum wage

OK, but after all this mambo jumbo, what is the rate of my pension? “Elementary my dear Watson!!!” (AC/50 * 5/9 * P.I. - SP)/52 Now that was simple wasn’t it???

But …... There is a maximum rate of pension payable, and Also a minimum rate, ….. The Maximum and Minimum rates (2010 rates) are as follows: - Maximum Two-thirds = € per week (€9, per annum) *Minimum rate – € per week * Where the contribution average is 50. Where the contribution average is less than 50, then the minimum rates can be less than indicated above.

But a widow is also…. Entitled to €3.12 per week additional bonus (2/3rds of the March and September bonus), and Two 6-monthly installments of € each representing the bonuses for June and December

And also... Every year, the pension rate is increased 2/3 rds of the cost of living increase generally awarded by Government; and The other 1/3 rd of the cost of living is paid as a Cost of Living Bonus at the beginning of the year (this year the maximum amount being paid is € per annum or €4.47 per week*) * amount can vary according to the date when the pensioner retired.

And also… Where a widow has the care and custody of her minor children, then the widows pension rate can be further increased by: - €4.54 per week for each child if the widow is employed; or €9.32 per week for each child if the widow is unemployed This allowance is paid over and above the child allowances which are payable under the Social Security Scheme.

Widows Pensions - Statistics Statistical Data for 2009 Number of Pensioners –16,090 (an net increase of 55 widows/ers over 2008) Expenditure:- € 97,690,588 (14.7%of total Social Security Expenditure) (an increase of € 3,665,913 in expenditure over 2008)

A statistical overview The following statistical data has been compiled by Mr. Clyde Caruana of the NSO; It provides a background to a discussion on gender perspectives - with relation to social security also

Evolution of Social Security Benefits €’ Contributory Benefits 285, ,815 Non-Contributory Benefits 123, ,016 TOTAL 409, ,831 % of GDP NSO – statistical data collated by Mr. Clyde Caruana

Labour Market Trends

Women Emancipation (1)

Women Emancipation (3)

Women Emancipation (2)

Distribution by Gender

Beneficiaries by Type and Gender

Expenditure by Type and Gender

Benefits with most Female Beneficiaries

Family-Care Related Benefits

Work Related Benefits

Pension Benefits

Key Points (1): Certain social benefits confirm that males form the majority of the active population; Female participation in the labour market is increasing; Female participation is necessary for economic growth; Work-related social benefits given to women will increase over the coming years;

Key Points (2): There are more males than females receiving contributory benefits; But there are more females than males receiving non-contributory benefits; This means that women are more likely to experience poverty than men; Is the above disparity due to the social security system itself? Do Traditional and cultural traits play a significant role in this disparity?

THANK YOU

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