Minister says in-work benefits will allow people to invest in pension schemes

Finance minister says that after three 'distributive' budgets, government now helping those left behind

Finance minister Edward Scicluna says in-work benefits will allow people to invest in pension schemes
Finance minister Edward Scicluna says in-work benefits will allow people to invest in pension schemes

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Finance minister Edward Scicluna has said that the government's policy of supplementing basic wages with in-work benefits will result in a situation where this increase in income is not reflected in the future pension of those receiving these benefits. He said that the increase in disposable income could, however, be used by people to invest in third pillar pensions schemes.

Scicluna was addressing a briefing on budgetary measures, together with family minister Michael Farrugia, aimed at pensioners. At the briefing, a number of points from Monday's budget speech were clarified and expanded upon.

Scicluna explained how previous budgetary measures were of a distributive nature, with measures such as free child care, in-work benefits as well as a number of others aimed at the creation of work. “The result of creating workis distributive in that it provides everyone the opportunity to better his position through employment,” he said. “In fact, poverty stopped increasing in 2013 and the last available data - that for 2014 - showed that the number of people living in poverty had started to decrease,” he added.

This budget he said, is seeking to address those that had not received as much in previous budgets.

Scicluna said that pensioners were one demographic in society there had not received as much and who are constantly faced with expenses related to their age, with the costs associated with care and medication taking their toll. He added that the problem with tax cuts is that those at the top tend to do better than those with a lower income and this budget is addressing this issue.

"There are problems with pensions because of decisions taken in the past. We have implemented measures to ensure sustainability of pensions in the future, however, we are also introducing measures to help those being affected now. We have done this by removing the burden of tax from income up to 13000, irrespective where that income comes from," said Scicluna.

Michael Farrugia echoed this sentiment when he said the idea was to help pockets of people who up to now had only been benefitting from the cost of living increase.

He said that the supplementary allowance which was announced will see people benefiting from an increase of €4 every week, in addition to the cost of living increase.

Farrugia also said that the government will be issuing government saving bonds, targeted specifically at pensioners, that will offer higher interest rates to those offered by banks and other government bonds. These bonds will mature over a six-year period.

Farrugia also said that the increase in the means test threshold of assets will benefit roughly 1000 people. “This is also true of the revision of tax on dividends and tax associated with transferring a family business to children.

Another measure that was discussed was the increase in carers allowance for those caring for their parents at home. This allowance would increase from €105 to €140. He added that means testing for this allowance is also being completely removed.

Scicluna also said that in total, Budget 2017 contained 20 measures aimed at pensioners, adding that there has never been a budget with as many initiatives aimed at this demographic.

The total government expenditure in this area will be in excess of €20m.