A pension law introduced in 1979, providing for the deduction of foreign pensions paid to former servicemen, infringes EU rules and should be changed or the government will face legal action, the European Commission said yesterday.
This is our money and we want it back
Nearly two years after starting formal legal procedures against Malta, which affects some 6,000 former employees of the British civil service, Brussels yesterday decided to take the issue a step further.
The Commission said that following its analysis of the response given by the government to its first warning in 2009, it had now given Malta two months to stop reducing Maltese old-age pensions by the amount of civil servant pensions received from other member states. Otherwise, the country would be hauled before the European Court of Justice.
Maltese legislation, enacted by a Mintoff-led government, provides that Maltese statutory old-age pensions are partly reduced by the sum of service pensions paid for past services in Malta or abroad.
According to the Commission, such a practice breaches EU social security coordination rules since all pensions based on national legislation, such as civil service pensions, fall under the protection of the EU rules on social security coordination.
“This prohibits the application of national rules on suspension and reduction of benefits to a pension calculated under social security coordination rules,” the Commission said.
However, it did not mention the issue of refunds, which service pensioners have been requesting for what they consider “daylight robbery”.
Publius Grech, secretary of the National Association of Service Pensions, said his organisation was satisfied the Commission had ordered the government to stop this “injustice”.
At the same time, he said his organisation was saddened that this remedy had to be sought through the Commission and that several Maltese governments had failed to resolve “one of the worst injustices since Malta’s independence”.
Asked whether his association would be insisting on arrears, Mr Grech confirmed the association would be making the case for authorities to grant arrears from 2004 onwards – when Malta joined the EU.
“This is our money and we want it back,” he insisted.
It is estimated the costs of such arrears will amount to millions of euro and no reserve fund currently exists to make the payments.
In 2006, Joseph Caruana, an ex-British serviceman, had filed a petition with the European Parliament’s Petitions Committee requesting a remedy to the situation. His complaint, relayed by Nationalist MEP Simon Busuttil, was followed by two further petitions and prompted the Commission to start legal procedures against Malta over this issue.
Although the government recognises the injustice committed by Labour and has been raising the service pension capping since 2008, it rebuts Commission’s claims that the provisions of the 1979 law are in breach of EU rules, particularly since Malta only became an EU member 25 years later.
Reacting to the Commission’s decision yesterday, the government reiterated its position.
It said the situation could not be compared to any of the situations previously considered by the European Court of Justice where the general principle of the freedom of movement of workers was elaborated.
It said in Malta’s case, in particular the category of Maltese pensioners receiving a UK service pension who never resided or worked in the UK, there was neither an element of movement from one country to another (since these employees never left Malta and never contributed towards the UK social security scheme), nor was there a situation specifically and expressly provided for in the regulations at issue.