The first persons in this cohort group will retire in 2027 at the age of 65 years. This group of persons is known as the Switchers Group. If you are born in this age bracket, your Social Security Pension will be based on the rules showed in table below.
|Born between 1962 and 1968|
|Your Retirement Age||65 years|
|SS Contributions to be Accumulated||Maximum of 52 yearly contributions for a period of 40 years|
|Calculation of your Social Security pension||employed/self-employed/self-occupied: best 10 calendar years out of the full 40|
|Calculation of Social Security Pension Income||2/3 of basic salary up to a Maximum Pension Income. The Maximum Pension Income for this age cohort is explained in detail below, as this will change annually subject to a pre-defined formula.|
It is important for you to know that if you accumulate a maxinimum of 52 weekly contributions for a period of 40 years (from age 18 to retirement date), you can, should you wish to do so, retire when you reach the age of 61 years. Should you wish to retire at 61 years of age, you will not be allowed to continue in employment until you reach your statutory retirement age of 65 years. This is a ‘social cost’ that you are asked to incur for the decision you made to choose ‘leisure’ as against continuing to contribute productively up to your retirement age.
The Maximum Pension Income will increase annually by the following formula:
Maximum Pension Income = Maximum Pension Income + [(70% of Increase in Wage Inflation) + (30% of Increase in Inflation)].
This formula is introduced to (i) retain a relationship between your annual State pension income and the average wage; and (ii) to provide you with a degree of protection against the erosion of your pension income’s purchasing power as a result of inflation. Based on this formula, the MPI is increasing as shown in the table below.
|Year||Maximum Pensionable Income|
We have all heard of the maximum weekly pension.
How much pension you are receiving depends upon the number of contributions you are paying and salary you are earning.
However, if you are in receipt of a salary greater than or equal to the maximum pensionable income, and you intend to work and pay contributions for 40 years, your pension income will be calculated to the Maximum Pensionable Income threshold.
The government wants you to remain active in the labour market. This is important for both you personally as well as the economy in general. Research shows that remaining active in employment helps you economically, as you are earning an income that most probably is higher than the pension income you will receive if you retire, and socially given that work provides you with greater opportunities to network.
From a national economic perspective your continuing to be in employment results in greater national productivity, further valued added contribution due to the experience and institutional memory you hold.
To encourage you to not to retire early before your retirement age the government has introduced a scheme that allows you to receive a higher pension for every year you remain in employment up to 65 years of age. The increase in your pension is based on the condition that during that year you remain in employment you do not receive your pension and have covered the required threshold of contributions to opt out to retire before your pensionable age.
This scheme is directed to incentivise you to remain in employment up to 65 years of age is currently opened only for persons employed in the private sector.
The Table below shows the impact this scheme will have on your pension income should you partake in it.
|Age at Retirement||Increase||Pension Income|
As this table illustrates, if for example, you are entitled to a pension income of €8,000 yearly at 61 years, refusing such a pension, continuing to work and claiming the pension later at 65 years of age would mean benefiting from this incentive scheme and increasing your pension income to €9,840 at 65.
Your spouse will also benefit from this increase in the event that you pass away having benefited from the % increase measure yourself.
Right to credits to any insured person:
- entitled to Sickness Benefit, or Injury Benefit, or Unemployment Benefit, or Special Unemployment Benefit, or Invalidity Pension.
- who seek employment through ETC i.e. register under Part One of the Register kept in accordance with the provisions of the Employment and Training Services Act. They receive Unemployment Benefit and therefore gain benefit credits.
- following the performance of volunteering work in Malta or abroad
- who take a career break to care for their child
- entitled to the Carers’ Pension
- who retires or has retired from the service on a full pension from Government (examples an ex-member of the Malta Police Force or of the Armed Forces of Malta) on completion of service prior to reaching pension age
- who has continued with further and higher education.