The Cost of Living Allowance: How it affects your income and your pension rate.

Cost of living is the cost of maintaining a certain standard of living.

Changes in the cost of living, over time, are often reflected in a cost of living index. In Malta, cost of living calculations are based on the prices of 40 products including food, water and electricity, clothing, etc. which are monitored to compare the inflation rate which would need to be adjusted as the cost of maintaining a certain standard of living.

Differences in cost of living between locations can also be measured in terms of purchasing power parity rates. In Malta the % inflation rate rose from 0.64 in 2016 to 1.37 in 2017 (NSO).

Cost of living increase, and in its abbreviated terms, COLA, is an amount of money, adjusted yearly by the government, to protect peoples’ living standards.

In Malta, the adjustment to the cost of living (COLA) is usually announced during the yearly national budgetary speech and comes into effect in January of the following year.

Tables below illustrate yearly / weekly cost of living for employees / employers and retirees.

Table (1) : Yearly cost of living increase for years from 2000 up to current year 2021

Table (2) : Weekly cost of living increase as a result of inflation rate reflected in prices you pay.

The cost of living adjustment for year 2021 is €1.75 a week.

Two-thirds of the weekly cost of living increase is always added to the pension rate and the other one third is added to the cost of living bonus. Both are issued in one pension payment, payable every four weeks. Thus, the yearly COLA is received in full by pensioners as well.

Table (3) : Pensioners receive the cost of living in full as per below