With reference to the article titled Brussels Deems Service Pensions Deduction Illegal (December 15) and the contribution by the chairman of the Alliance of Pensioners’ Organisations titled Brussels Probe Into Pensions Fraud (December 18), there is yet another category of pensioners suffering discrimination, namely, persons receiving a pension not payable by the UK government. May I therefore offer some further information and comments on the subject.
An illustration of the discrimination existing against certain categories of pensioners is found in the 12th schedule to the Social Security Act (Chapter 318). That schedule specifies the full rates of retirement pension per week payable to two categories of pensioners, which rates were last revised by Legal Notice 437/2010.
The schedule distinguishes between “persons who are also in receipt of a service pension that is payable by or on behalf of the Government of the United Kingdom” and “persons who are also in receipt of a service pension that is not payable by or on behalf of the Government of the United Kingdom”.
The first category receives per week €102.80 (married) and €82.56 (single) while the second category receives €97.07 (married) and €79.95 (single). Both categories are discriminated against in relation to other persons not in receipt of a service pension. Since social security pensions are related to mandatory contributions, they should apply universally irrespective of any extraneous factors.
As part of the present pensions reform, mention is made of second- and third-pillar contributions. Would the government on some future date suddenly decide to legislate that persons who will have contributed extensively to these two pillars need not receive the full rate of the first pillar pension because of the comfortable extra pension deriving from the other two pillars?
This may perhaps be described as scaremongering but this is exactly what happened in 1979. After the introduction of the National Insurance Act in 1956, persons in receipt of a service pension received also the full rate of pension applicable under the NI Act. In 1979, the NI rate was frozen at the then applicable rate of Lm12.10 a week in the case of persons in receipt of a pension from another source.
In 1987 and thereafter, the anomaly was partially rectified. However, as indicated above, the 12th schedule perpetuates the discrimination and, in the case of the second category (pensions not paid by the UK government), the discrimination is greater and was even greater before 1993. The government then started to close the gap between the two categories in the 12th schedule and continued to do so in 1994 (as announced on page 70 of the Budget speech, 1994) but, unfortunately, the exercise was discontinued after that year (probably through an administrative oversight).
The second category of pensioners in the said schedule includes not only ex-Maltese government civil servants and persons in receipt of a pension from a private entity but also persons in receipt of a pension payable by a government other than that of the UK. Any decision by Brussels with regard to the petition before it will undoubtedly be extended to the other categories suffering the discrimination. The Minister of Finance would do well to take this probability into account.