Service pensioners got some reprieve four years ago when the government reduced the deduction from their two-thirds Maltese ­pension by €465.

With the reductions, my two-thirds pension only amounts to some €100 per month

It was October 15, 2007 and Prime Minister Lawrence Gonzi, who was then also Finance Minister, read out the Budget for 2008 that turned out to be a generous exercise in wealth redistribution.

Reacting to long-standing complaints from service pensioners, the government had, at the time, started ignoring €465 from the service pension when calculating by how much the two-thirds pension should be cut.

By virtue of a law enacted in 1979, people receiving a second pension – whether from abroad such as those who worked with the UK civil service or from a private source such as a company pension – had their Maltese two-thirds pension deducted accordingly.

The 2008 Budget move was intended to redress this situation but the government was not in a position to restore the full two-thirds pension at one go.

Calculations presented in Parliament by Dr Gonzi showed that restoring the full two-thirds pension would have cost the public coffers almost €40 million a year, rising to almost €56 million in a few years’ time.

That time may have come after the European Commission on Monday ruled the 1979 pension law infringed EU rules. The government has to change the law or face legal action at the European Court of Justice.

The Commission’s declaration, two years after starting formal legal proceedings against Malta, is a victory for service pensioners but the government’s insistence to continue arguing against the ruling has baffled them.

It is the 2007 declaration on Budget Day that has come back to haunt the government, almost five years later, as Albert Cilia-Vincenti, chairman of the Alliance of Pensioners’ Organisations, points out.

“By giving those minimal concessions, the government admitted liability and it makes no sense today for it to continue resisting the European Commission’s ruling,” Prof. Cilia-Vincenti insists.

He is one of an estimated 6,000 elderly people who take home a reduced two-thirds pension because of some other pension they receive from abroad.

“I worked as a consultant in the UK for 24 years and then worked for another 12 years in Malta but, with the deductions, my two-thirds pension only amounts to some €100 a month,” Prof. Cilia-Vincenti says.

Now that the government is toying with the idea of introducing a second pillar pension scheme, which means people will receive two pensions, it is “nonsensical and contradictory” for the authorities to continue resisting change, he adds.

The 1979 law is an obstacle to the EU’s policy of pension portability encouraging movement of labour between member states, Prof. Cilia-Vincenti says.

But pensioners are expecting the government to give them a refund of the money they were denied and which they insist rightfully belonged to them.

“The refund should at least date back to 2004 when Malta joined the EU,” Prof. Cilia-Vincenti insists.

The problem does not only concern pensioners who worked with the British civil service. Prof. Cilia-Vincenti explains that a member of his organisation had opted in 1979 to continue paying into a private pension scheme run by Farsons, the drinks company he worked for. As a result of receiving a private pension, the man sees his two-thirds pension cut accordingly.

Although the government recognises the injustice committed in 1979 by a Labour Administration, it contests the Commission’s claim that the law breaches EU rules since Malta became a member 25 years after it was enacted.

It is this injustice pensioners hope will be remedied after the Commission embraced their case.

Whether the solution is found any time soon is another matter altogether but they certainly are in no mood to keep waiting.

ksansone@timesofmalta.com