SOCIAL SECURITY IN MALTA

~~ A Brief History And Major Developments Up To 1994 ~~

The development of Social Security in Malta could be traced back to the time when the Order of the Knights of St John ruled over the island. In fact official documentation exists whereby it has been conclusively established that a part of the activities carried out on the island by the Knights centred around the provision of assistance in cash and in kind (usually free bread and soup) to the poor and to certain other deserving categories of the Maltese population, mainly disabled soldiers and galley-men or their widows and orphans. Initially, requests for such assistance were submitted to the Grand Master or Treasury Officials and each case was treated on its own merits. Later on, towards mid-1600, charitable bodies were officially set up by the ruling Knights in order to administer the provision of such assistance in a more organised manner since in the meantime other forms of assistance were introduced (such as free medicines and free institutional care for the sick and the aged) and new types of beneficiaries (the blind, the lame, and the leprous) were included. At the beginning these bodies were made up solely of Knights but soon after laymen from amongst the Maltese population were appointed by the Grandmaster to form part of such bodies.

Quite naturally, these philanthropic activities by the Knights had not been spurred forward as a result of some conceptual belief within the Order that such social services should have been granted to the Maltese population as of right, but simply as a result of the Order's strong belief in charitable deeds. In fact this concept of "organised charity" in according help and assistance to the needy, and for the covering-up of the several contingencies that might arise throughout a person's life-time, persisted not only throughout the reign of the Knights but also well into the 1900's.

In fact it was only in the 1850's that mention for the need of a pension scheme for the aged as of right was publicly made. Not much was really said in the form of words: only nine in all, namely "the old should be pensioned, the young brought forward". But their author was the very same representative of the British Crown on the island, that is Governor Sir John Gaspard Le Marchant; and once it was such an important and influential person who had brought the subject forward, the ball had perforce to start rolling, even though the population had to wait for 30 years to evince the first tangible results. In fact, in 1885 the first-ever Government sponsored social benefit as of right was introduced on the island. And the first beneficiaries were the members of the Malta Police Force in whose respect a pension scheme was brought to being. Next on the list were the members of the Malta Civil Service; but they had to wait for a further 20 years for them to achieve similar rights.

From then on, things started to move forward at a relatively fast pace. The Ordinance regulating the payment of such pensions was in fact repealed in 1926 and again in 1932 until finally, in 1937, a still existing 'Pensions Ordinance' was introduced "to repeal and re-enact with amendments the law relating to the grant of pensions, gratuities and other allowances to persons in the Public Service of Malta, and to the grant of pensions and gratuities to dependants in certain cases". In the meantime, a still existing 'Widows and Orphans Pensions Act' was introduced in 1927 "to make provision for the granting of pensions to widows and children of deceased Public Officers". To-date both schemes have been administered by the Treasury Department.

Public Officers and their dependents were, therefore, the very first category of Maltese workers to reap the benefits of social security advancement on the island, paving the way for others outside the Public Service. In fact, the achievements of the members of the Public Service in this field not only instigated pressure from several quarters (mainly from the newly‑established and fast-growing trade union movements) towards the formulation and implementation of similar Government policies and Government-run schemes with regards to other Maltese workers nation-wide, but they also prepared the ground for the creation and introduction of other social security schemes in favour of the workforce in general.

Suffice it to say that already as far back as in 1929, the first‑ever Social Security contributory scheme according short-term coverage to all workers on the island in respect of injury at work was introduced. This became possible through the enactment of the 'Workmen's Compensation Act', which granted the payment of injury benefit to those workers who were injured on duty as a result of their employment. Contributions towards this scheme were compulsory and were made on a tripartite basis, with employers, employees and the State each paying an equal share into the fund so that the scheme would remain viable. The concept of social insurance was thus introduced into our islands for the first time.

Unfortunately, the political events in Europe in the 30's and a few years later in other parts of the world which ultimately led to the eruption of World War II within just two decades of World War I, could not but serve a severe blow to Social Security advancement in any country, especially a small country like Malta, which at the time not only depended mainly on British finances but also suffered extensive physical damages as a result of war action which had to be taken care of immediately. In fact, for some years after the end of World War II, the Maltese people and their leaders were more concerned with the earliest procurement possible of finances in connection with reconstruction works and the achievement of better and more decent living conditions of the population in general rather than the enhancement and development of social security schemes. The question of age pensions for all and the creation of new social security schemes could not, therefore, be tackled seriously and effectively until 1948. This was the year when the 'Old Age Pensions Act' was introduced.

This Act, which was brought into effect on the 1st August 1948, provided for the payment of pensions to persons over the age of 60 years. Unlike the 'Workmen's Compensation Act', this Act was not based on contributions, but on a financial means test of the person claiming such pension. Hence, no specific fund was created in order to cater for such payments, and funds were made available directly by the Government through normal revenue sources.

The early 50's, then, saw the advent of an unregulated scheme of financial assistance (then known as 'relief') for needy families whose head was unemployed. This new scheme was not based on contributions but on the means of the individual. These individuals used to have their cases examined by the then Director of Labour and Social Welfare, who had the faculty of giving them financial help according to his best of judgement. This scheme, as always, had its pros and cons, and the Government naturally felt that it had to regularize the scheme in such a way that nobody would be accused of giving benefits unjustly or in an inappropriate manner.

This led to the promulgation in 1956 of a law in this respect, entitled 'The National Assistance Act', which provided for the issue of social and medical assistance (the latter, both in cash and in kind) to heads of household who were unemployed and either in search of employment or unable to perform any work because of some specific disease provided their family's financial resources fell below a certain level. However, those who suffered from a chronic disease as specified in the Act itself were allowed medical assistance in kind free of charge as well, irrespective of their family's financial resources. In addition to social and medical assistance, this Act also provided for free institutional care for the aged and for free hospitalisation and treatment in all Government-run institutions/hospitals. Both these latter benefits were accorded provided claimant satisfied the means test referred to above. Furthermore, whoever qualified for social assistance was also paid a rent allowance if the head of household was paying rent for his place of residence.

Simultaneously, an Act providing for a comprehensive scheme of social insurance financed through contributions paid by the employee, his employer and the State was introduced covering a wide range of benefits, allowances and pensions. This scheme was compulsory and the contingencies covered were sickness, employment injuries/diseases, unemployment, widowhood, orphan-hood and old age; and in order to qualify for benefit the claimant had to satisfy the contribution conditions attached to the payment of the particular benefit that was being claimed. This Act was entitled 'The National Insurance Act'. With the coming into force of this Act, the 'Workmen's Compensation Act' was repealed once and for all since its provisions had more than been completely covered by the provisions governing employment injuries/diseases under this new Act.

A year later, that is in 1957, the provisions of the 'Old Age Pensions Act' of 1948 were extended to blind persons, thus introducing a new non-contributory pension to the Malta scene termed Blindness Pension based on an identical means test to that in force in respect of a non-contributory Old Age Pension. Initially, this pension was payable only to blind persons who were aged 40 years or over. However, in 1962 this qualifying age was lowered to 14 years, thus tying it to the school-leaving age at the time. In this way, all blind school-leavers who potentially were in a position to search for employment but could not do so because of their blindness became entitled to this pension provided they satisfied the required means test.

During the next 10 years or so, there were only 3 notable amendments to social security legislation in Malta. Two of these important amendments were carried in 1965 and the other was carried in 1970. Those of 1965 provided for -

(a) the inclusion, within the scope of the 'National Insurance Act', of self‑employed persons (i.e. those who were economically active not in an employed capacity) and non‑employed persons (i.e. those who were not economically active but still managed to maintain themselves and their dependents, if any, without working) so as to make this scheme applicable to practically all of the Maltese population; and

(b) the introduction of a contributory scheme for the award of an Invalidity Pension as a new benefit under the aforementioned Act.

The other important amendment referred to above (that of 1970) was also made with respect to the 'National Insurance Act'. This concerned the lowering of pension age for males from age 63 to age 60 within the following 3 years (i.e. down by 1 year in August of each year, reaching down to 60 in August of 1972) in order to bring male contributory pensioners in line with their female counterparts and in line with the definition of pension age under the non-contributory scheme (i.e. the 'Old Age Pensions Act').

At this stage one has perforce to put on record that between April 1958 and February 1962 the Maltese were without a democratically-elected Government and during all these years up till the attainment of Independence in September of 1964, our political leaders were most of the time at logger-heads with the British Government on several issues and were thus more intent upon achieving radical and important Constitutional reforms than anything else. The attainment of Independence in 1964 settled some of the political issues involved but this in turn meant also that the Government had to find ways and means how to shift from a "naval base" economy to one based mainly on industry, services and agriculture in the shortest possible time after having been for practically 3 full years (i.e. from early 1962) over-burdened with the task of finding alternative local employment for the hundreds of workers who were being made redundant by the British Services. Social Security advancement could not, therefore, be made but to wait for better times before it could really gather its momentum once again; and the above 3 major and positive innovations to the provisions of the 'National Insurance Act' in 1965 and in 1970 were, under these conditions, a feat to achieve.

However, in 1971, the new Government which was voted to power in June of that year decided to cause a stop to the successive lowering of the pension age under the contributory scheme with effect from that year and amended the 'National Insurance Act' accordingly by establishing age 61 as the pension age for males under this scheme; thus doing away with the further lowering that had to take place the year after. The main reason for this as explained by Government at the time was that the situation in the National Insurance Fund was already precarious and it felt that it was more important to raise the standard of already existing pensions and certain other benefits, both contributory and non-contributory, rather than to increase the existing load with new pensioners unduly, some of whom would have remained in employment anyway since they would still feel healthy enough to continue in such employment for a couple of more years, especially the self-employed classes. For the record, one has to point out that in true fact in 1971 and later years Government did increase substantially all Social Security pensions and certain other Social Security benefits against what was considered to be by some more than a commensurate increase in the rate of contributions, obviously in a desperate effort to salvage the then practically zeroed Fund. This salvage process, however, came rather too late in the day since by that time the load of contributory age pensioners had increased considerably both as a result of the influx of the very first groups of ex-self-employed persons into the category of contributory age pensions as well as the inordinate increase in the number of such pensioners consequent upon two successive lowerings of the pension age in terms of the 1970 amendments to the Act. In fact, statistics kept by the Department of Social Security show that, whilst at the end of 1969 the number of contributory age pensioners stood at 6,919, by the end of 1970 this number had already shot up to 12,315, and by the end of 1971 the number of such pensioners had gone up to 14,473 (an increase of more than 109% within a short space of 2 years!). The end result was that in 1978 the National Insurance Fund was officially wound up after having been for some years in the red and made financially viable only through regular subventions from the Consolidated Fund. From then on, a new system of "pay as you go" was introduced in substitution of the funding system, with any deficits at the end of the financial year being made good directly by the Exchequer.

In 1972 Government introduced for the first time the payment of an annual Bonus to all Social Security pensioners and recipients of Social Assistance. Initially this Bonus was being paid 'ex-gratia'; but then after some years an 'ad hoc' provision was made in each of the three Acts referred to above, thus making from then on the payment of such Bonus statutorily due to such beneficiaries as of right.

In 1974, then, a scheme of Child Allowance was introduced in our islands, again as part of the 'National Insurance Act'. Notwithstanding its inclusion in an Act which provided benefits only to those who were paying or had paid contributions under that Act, payment of such an allowance was not subjected to some specific contribution test as had been the case up to that date with other benefits payable under the said Act. In fact, persons receiving Social Assistance and non-contributory pensions were also made eligible for the payment of such an allowance.

Initially, only the first 3 children born aged 16 years or under were eligible for this allowance. However, in 1977, this scheme was extended to cover the fourth and subsequent children below age 16 within the family unit (an allowance then termed Additional Allowance), as well as those children who by reason of their reaching age 16 lost their eligibility to such an allowance but were still attending school or registering for employment as school-leavers. The former were eligible to what then became known as Special Allowance, whilst the latter were eligible to what then became known as Unemployment Special Assistance. Unlike the provisions concerning Additional Allowance and Special Allowance, the provision for the payment of Unemployment Special Assistance was not included in the 'National Insurance Act' but in the 'National Assistance Act', even though it was not attached to any financial means test.

A unique feature of this whole scheme was, however, that the 4th and any subsequent children below age 16 within the household were not eligible to any of the first 3 rates when any of their elder brothers or sisters ceased to be eligible to such rates as a result of their reaching age 16. This remained to be the case until the end of 1986. Towards the end of 1986 the 'National Insurance Act' was amended so that with effect from January of 1987 this 'moving up the ladder' could be made possible. Furthermore, as from 1987 as well, Additional Allowance was amalgamated to Child Allowance and the whole was re-termed Children's Allowance. On the other hand, the provisions governing the payment of Unemployment Special Assistance were extracted from the 'National Assistance Act' and became part and parcel of the Special Allowance scheme payable under the 'National Insurance Act'.

The year 1974 also witnessed the introduction of the non‑contributory Handicapped Pension scheme (as of 1994 renamed Disability Pension). For this purpose, the provisions of the 'Old Age Pensions Act' (which had in 1957 been extended to blind persons) were, in 1974, further extended to cover persons who were suffering from a mental severe sub-normality as defined in the Act or from cerebral palsy. These provisions were once again further extended in 1975 to include certain categories of severely disabled persons.

In 1979, then, a new contributory scheme for the payment of a wage/income related retirement pension was introduced within the ambit of the 'National Insurance Act', accompanied by a pension scheme for widows calculated on their deceased husband's wage/income. These new schemes were supplemented by a re-formatted contributions system whereby a wage-related contribution and an income-related contribution were introduced in respect of employed persons and self-employed persons, respectively. Furthermore, a National Minimum Pension (again as part of the 'National Insurance Act') was introduced whereby any person claiming a contributory pension would not fall below a certain rate of pension provided he had a full contribution record to his credit.

In 1981 the payment of Maternity Benefit was introduced within the scope of the 'National Insurance Act', but again not linked to any particular contribution test, as had been the case with the introduction of a Child Allowance 7 years before. This benefit was made payable to all pregnant females, and the relative payment covered the last 8 weeks prior to confinement and the first 5 weeks after confinement. This benefit, however, is not payable to females who are entitled to Maternity Leave on full pay from their employer in terms of the Conditions of Employment (Regulation) Act.

In January, 1986 payment of Social Assistance was extended to single or widowed females who were on their own regularly taking care of an elderly or handicapped relative on a full-time basis who was living under the same roof provided such relative was unable to take care of himself.

In January 1987 all these three separate Acts (i.e. 'Old Age Pensions Act', 'National Assistance Act' and 'National Insurance Act') as well as the 'Director of Social Services Act' of 1952 - through which the Director in charge of the Department administering such social benefits had been given special powers and functions in administering all public assistance schemes -were repealed and a consolidated 'SOCIAL SECURITY ACT' was introduced by way of replacement to establish afresh, in the words of the law itself, "a scheme of social security and to consolidate with amendments existing provisions concerning the payment of social insurance benefits, pensions and allowances, social and medical assistance, non-contributory pensions and the payment of social insurance contributions by employees, employers, self-employed and the State".

As regards the self-employed, one has to clarify that in terms of the said Act (and, prior to that, in terms of the 'National Insurance Act' as in force on the date of its repeal) the term "self-employed person" applies to all those persons who are above school-leaving age and who, in terms of the said Act, have not yet "retired" and who, for the purposes of the said Act as well, are not considered to be "employed persons" as defined by the said Act as well.

In January 1988 two new benefits were introduced, namely Handicapped Child Allowance (as of 1994 re-termed Disabled Child Allowance) and a means-tested Parental Allowance. A common pre-condition towards the payment of these allowances was that the beneficiary (normally the mother) should, in the first instance, be entitled to Children's Allowance. Other important conditions were attached to the payment of these allowances, namely that,

(a) in the case of a Parental Allowance, payment of same would not be due where there are no children below the age of 11 years and/or the beneficiary is either employed or a self-occupied and/or the net income of the mother and the father taken together exceed the limit laid down by the Act itself, whilst

(b) in the case of a Disabled Child Allowance, payment of same would not be due unless the child in respect of whom this allowance is claimed is certified by the Department's medical panel to be suffering from a condition or a disease which is specified in the aforementioned Act.

In January 1989 two further benefits were introduced, namely Family Bonus (payable to recipients of Children's Allowance in addition to such an allowance) and short-term Emergency Assistance in cash and in kind for home-driven destitute females who find temporary shelter in a home for such females. The Emergency Assistance scheme is administered by the Director of Welfare and financed by the Director of Social Security through funds provided for under the Social Security Act. Emergency Assistance is accorded until such time as the female concerned finds her own place of abode and is ultimately awarded statutory Social Assistance as of right.

In January 1991, two other benefits were introduced, namely Widower's Pension and Orphan's Supplementary Allowance. An important pre-requisite for entitlement to a Widower's Pension, is that the widower concerned was on the date of death of his wife completely dependent on her means for his livelihood OR that as a result of his wife's death he had to leave his employment or self-occupation (permanently or temporarily) in order to take care of his dependent sons or daughters. In addition to the above, all other conditions, etc applicable in the case of widows for the payment of a pension in respect of widowhood are also equally applicable to widowers, `mutatis mutandis'. On the other hand, an Orphan's Supplementary Allowance is payable in respect of orphans who have passed their 16th birthday but not yet their 21st birthday and who are still unemployed or whose earnings from a gainful occupation fall below the national minimum wage as established by Government under the Conditions of Employment (Regulation) Act.

In January 1992, another new benefit was introduced, namely Carer's Pension. This new pension which is non-contributory but is based on a means test, as are all other non-contributory pensions, is payable to all unmarried or widowed persons who are taking care, on their own and on a full-time basis and regularly, of a parent who is bed-ridden or confined to a wheel-chair.

Finally, in 1992 as well, the age limit for the payment of a Disabled Child Allowance has been extended up to the age 18, provided such "children" are -

EITHER still regularly attending an educational institution duly recognized by Government in terms of the Education Act and are not at the same time considered to be liable for the payment of a contribution under the 'Social Security Act' in terms of this latter Act;

OR are not entitled to receive a Disability Pension or a Blindness Pension under the 'Social Security Act'.

© Carmel L. De Gabriele

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