A decision by the Labour Government in 1979 to reduce servicemen’s pensions may have come back to haunt another PL Administration.
Following warnings by the European Commission in 2009 and 2012, Brussels yesterday decided to take Malta to court to force the island to come in line with EU social security law.
Following changes to the Social Security Act that had been introduced by the late Prime Minister Dom Mintoff, Maltese individuals receiving a contributory foreign pension, including those of the British services, had their old-age pension deducted by the amount of the overseas allowance they were entitled to.
Pensioners have been fighting this law for years and now have the backing of the European Commission, which deems the practice illegal.
Following a meeting of the College of European Commissioners in Brussels yesterday, it was decided that Malta will face the European Court of Justice.
The decision could seriously affect the country’s public finances because, according to Publius Grech, secretary of the National Association of Service Pensions, there were about 12,500 pensioners involved and it could cost an extra €10 million a year in pension payments, apart from the tens of millions of euros if refunds are given.
According to Brussels, the Maltese legislation – which provides that the sum of service pensions paid in Malta or abroad should be deducted from statutory old-age pensions – “breaches the social security coordination rules of the EU”.
“All pensions based on national legislation, such as civil or military service pensions, fall under the protection of the EU rules on social security coordination and those rules prohibit the application of national regulations on suspension and reduction of these types of benefits,” it said.
“The Commission became aware of the infringement in Malta through several petitions submitted to the European Parliament and, despite the Commission’s request for Malta to stop cutting civil service pensions received from other member states, no measures have been notified to the Commission.”
In a television interview last Saturday, Prime Minister Joseph Muscat indicated that the infringement could be coming to a head and said he had not known about it before.
Mr Grech yesterday rebutted Dr Muscat’s statement: “Let me make it clear that it is not true that the new Government didn’t know about this.
“We had even discussed the issue with Dr Muscat and Minister Karmenu Vella before the election and stated publicly that Labour had no plan for us.”
He said that, over the past years, the Government had started addressing the problem and the Nationalist Party had also proposed a long-term solution with precise costings.
“On the other hand, we were not given any costings by Labour, even though we asked specifically for them.”
If the ECJ upholds the Commission’s case, Mr Grech said pensioners would also insist on arrears, adding: “We have to be realistic.”
The Government has always maintained that the Commission’s position was wrong because the situation in Malta could not be compared to other cases considered by the ECJ where the general principle of workers’ freedom of movement was elaborated.