In his Budget 2025 speech, Finance Minister Clyde Caruana announced that next year, pensioners will receive another increase of €8 per week, or €416 annually, which includes the Cost-Of-Living-Adjustment (COLA), an increase which will benefit over 100,000 retired persons, disability pensioners, widows, and others entitles to an age pension.
With this increase, combined with the annual increments pensioners have received over the past 10 years, the total amount will reach at least €3,583, almost €70 per week, he said.
"What pensioners used to receive in a full year, 10 years ago, will now be received within the first eight payments of the year, leaving five additional payments to receive," Caruana said.
There will also be further improvements for pensioners born before 1962, to reduce the gap in the Maximum Pensionable Income between those born after 1962.
Those born before 1962 who would have earned a salary above the Maximum Pensionable Income of €23,500, will receive an additional adjustment to their pension. This measure is expected to benefit around 26,000 pensioners, Caruana said.
Caruana also said government will continue to improve tax exemptions for pensioners from the age of 61 and up, with the increases announced. Widows will remain tax-exempt thanks to a measure introduced this year.
The Budget for 2025 also includes an additional increase to widows' pensions, now the fourth increase, of an average of around €3 per week, in addition to the general increase of €8 per week, Caruana said, an adjustment expected to impact around 7,500 widows.
Service pensioners will see the portion of their service pension that is not considered for social security pension purposes increase by an additional €200, reaching €3,666.
This adjustment applies based on the general rules for the social security pension for anyone with a service pension.
Caruana said that about 3,250 service pensioners will benefit from this measure, which also ensures that by age 72, the entire calculated amount of their service pension will no longer be considered.
There will also be improvements in bonuses for those who do not qualify for a pension. People who have not paid enough contributions to qualify for a pension will receive a bonus in 2025, based on how many contributions they did make.
Caruana said that this bonus, introduced in 2015 and increased several times, currently reaches €500 for those who paid up to four years of contributions and €600 for those who paid five to nine years.
Next year, Caruana said government will make an important change to further support these individuals and ensure fairer compensation for those who paid more contributions.
The new rates will be based on the actual number of contributions paid, ranging from €550 for those who paid up to one year to €1,000 for those who paid up to nine years. This measure will benefit over 16,000 people, mostly married women.
Caruana also said government will continue to strengthen its expenditure on measures for pension sustainability, introducing a measure to increase the number of years of contributions required for a full pension by one year.
He said that this will affect individuals born in 1976 or later, for whom the stipulated period of paid or credited social security contributions will be 42 years, instead of the current 41 years, as advised by the Strategic Pensions Group.
The retirement age and social security contribution rate will not increase, thanks to economic growth and job creation, he said.
New Medical Social Assistance benefit announced
Government will also be creating a new benefit, known as the Medical Social Assistance, specifically for individuals suffering from medical conditions that prevent them from working.
The Medical assessment will be similar to that for those receiving invalidity pensions, he said.
Caruana said that besides the full COLA, these families will receive an additional €5 per week for each family member.
Other beneficiaries who are able to work will receive the full COLA and will be guided toward training opportunities offered by Jobsplus schemes to move away from social dependency.
Another increase to the Children's Allowance
The 2025 Budget includes yet another increase to the Children's Allowance, with Caruana announcing that for the second consecutive year, government will be raising this supplement by another €250 per child, regardless of family income.
Caruana also announced another measure, so that families can qualify for improved child allowance rates.
In calculating the allowance rate, government will ignore not only the amount of social security contributions paid from parents' income but also the amount of income tax paid.
Caruana said this improvement is estimated to cost government around €16.5 million and will affect approximately 42,000 families with 63,000 children.
This measure will also be applied in the calculation of the In-Work Benefit rates, where government will ignore both social security contributions and income tax paid by the parents.
Caruana said that this will positively impact around 25,000 families with approximately 40,000 children under the age of 23, as not only can the rate increase due to lower net income, but new hardworking families will be able to benefit.
This year, parents whose children continue their post-secondary education began receiving a special allowance of €500 to support them in their educational journey.
Caruana said that the allowance is paid over three years to students attending both state and private schools.
In 2025, approximately 10,500 families will receive the second payment, while parents whose children are starting post-secondary education this month will receive their first payment. The total expected expenditure is around €6 million, Caruana said.
Increases in birth, adoption bonuses and marriage grants
Caruana also announced an increase in the bonus rate for births and adoptions, where in 2025, government will increase this bonus by to €1,500 for the third, or more, new child in the family. This measure is estimated to benefit approximately 580 families.
Government is also increasing the marriage grant, to be received by both spouses upon marriage or civil union. This will be increased to €500, amounting to €1,000 between the two spouses. On average, around 3,000 people receive this grant annually.
Next year, government will also extend the right of an additional 100 hours of paid leave per treatment cycle for prospective parents undergoing IVF treatment to self-employed women and/or their spouses, if they are also self-employed, Caruana said.
He reiterated that this measure, as already announced, will extend to self-employed fathers, paying them for 10 days (or 80 hours) at the same maternity leave rate given to self-employed mothers when they give birth, based on the National Minimum Wage.
This entitles them to a benefit equivalent to a maximum of 60 hours at the national minimum wage rate for the woman and 40 hours at the same rate for her spouse.
Caruana said that the fostering allowance will, in 2025, increase again by €10 per week, bringing it to €120 per week or €6,240 per year for each child in care.
The additional mechanism received by families with low or moderate incomes against the rising cost of living will continue to be rolled out, where each family will receive between €100 and €1,500 annually.
Caruana said that a total of approximately €48 million will be distributed among 100,000 families with nearly 200,000 dependents.
Government will again adjust the parameters of the supplementary allowance mechanism, increasing the maximum rate paid to couples by €190, to €1,289 per year, while the rate for individuals will rise by €69 to €667.
Furthermore, the income limit for couples will be extended to €18,000 annually. Currently, around 20,500 beneficiaries are expected, and approximately 1,500 additional families are expected to benefit from this change.
Starting from next year, the capital asset limits to provide greater support for those in need will increase. The current limit of capital asset amounts for non-contributory assistance for married couples or partnerships will increase from €23,300 to €26,000, while the limit for individuals will rise from €14,000 to €16,000.