Higher pensions for those who work beyond retirement age

People who delay their retirement will be rewarded through higher state pensions when they finally stop working.

The novel scheme, announced in this years Budget, will initially only be available to workers in the private sector who have paid their full 35 years of social security contributions and choose to put off their retirement until they reach 65.

People eligible for a state pension 61 who delay their retirement until 62 will receive a 5% top-up on their pension.

Those who choose to retire at 63 will receive an additional 5.5% pension top-up, while those who retire at 64 will receive a further 6% bonus and those who retire at 65 will receive a further 6.5%.

The scheme will also be applicable to part-timers and self-employed people. All pension increases will be permanent.

Effectively, this means that people eligible for a state pension at 61 will be able to receive a 23% boost to their pension if they choose to continue working until they reach 65.

Therefore, a pensioner who would otherwise have only been eligible to a measly €800 monthly state pension will be eligible to a pension of €984.

Social solidarity minister Michael Farrugia told a press conference that the scheme is intended to encourage more elderly people to stay in work.

“Malta ranks poorly in global rankings with regards the number of elderly people who work and study, and this scheme will address the first factor,” he said.

The employment rate of elderly people stood at 42% last year, up from 34.7% in 2012.

He added that the government is looking to expand the scheme to the workers in the public sector and did not rule out expanding it for people who opt to continue working after 65 years old.

“We will introduce similar initiatives in the future, but we have to start from somewhere and this is the first step,” he said.