Several months after it started infringement procedures against Malta on “illegal” deductions in the contributory service pensions of former British servicemen, the European Commission is still analysing the government’s explanation.

A final solution is still some three to four years away

European Commission sources said the issue was “very complicated” and the EU Executive was not in a position to say what further action, if any, would be taken because it required more time.

The government submitted its explanation to Brussels last February.

“We know the issue is very sensitive to many ex-British servicemen in Malta. However, we can’t really rush on this one as it is very complicated, goes back a long time and may have serious consequences on the public purse,” the sources said.

The government has rebutted the Commission’s charge that the provisions of a law enacted in 1979 was in breach of EU rules, particularly as Malta became an EU member 25 years later.

The Commission gives a bureaucratic official response on the issue: “The Commission services are currently finalising their analysis of the Maltese authorities’ observations before deciding whether to proceed with the next step in the procedure,” European Social Policy Commissioner Laszlo Andor told Nationalist MEP Simon Busuttil recently in response to a parliamentary question pushing him to state his next line of action.

The Commission sources however said that even if Brussels decided to pursue with its infringement procedures, a final settlement was still years away. “We are still at the first stage of infringement procedures and there are two other stages before we may end up in court. We are sure that if we proceed, Malta will want to go to the European Court of Justice on this one and that means a final solution is still some three to four years away.” The issue affects about 6,000 ex-British servicemen who, over the years, saw their UK pension deducted from the normal national insurance pension they qualified for. It dates back to the years of former Prime Minister Dom Mintoff when, in 1979, a Labour government had decided to impose a ceiling so that ex-British Services employees would not be entitled to two pensions.

Following a four-year investigation into a petition filed in 2006 by Joseph Caruana, a former British servicemen, the Commission last year decided to issue an infringement notice against the island saying Maltese legislation was not in conformity with the EU.

Siding with Mr Caruana, the Commission had said its services had intensive contacts with both the UK and the Maltese authorities on the issue and the government in Malta confirmed that the Social Security Act (Cap. 318) provided for the deduction of service pensions from national social security pensions. This, according to the Commission, had been established to be illegal and not in conformity with EU rules.

Recognising this anomaly, the government started taking measures to adjust the pension system of ex-British servicemen. However, according to the Commission, this was not enough because the service pensions, which were contributory, should not have been deducted in the first place.