ACT No. XIX of 2006 AN ACT to further amend the Social Security Act.

I assent.

E DWARD F ENECH A DAMI

(L.S.)

President

7th December, 2006

ACT No. XIX of 2006

AN ACT to further amend the Social Security Act.

BE IT ENACTED by the President, by and with the advice and

consent of the House of Representatives, in this present Parliament

assembled, and by the authority of the same, as follows>

(1) The short title of this Act is the Social Security

(Amendment) (No. 2) Act, 2006 and this Act shall be read and construed

as one with the Social Security Act, hereinafter referred to as “the

principal Act”.

(2) This Act shall come into force on such date as the

Minister responsible for social policy may, by notice in the Gazette,

appoint and different dates may be so appointed for different purposes

and provisions of this Act.

PART I

AMENDMENTS TO THE PRINCIPAL ACT

Article 2 of the principal Act shall be amended as follows>

(a)

sub-article (1) thereto shall be amended as follows>

(i) for the definition “pension age” there shall be

substituted the following>

“ “pension age” means sixty five years of age>

Provided that>

(i) (a) saving the provisions of paragraph (ii) hereof,

in the case of a person born on or before the 31st December

1951, pension age shall be sixty one years<

(b) in the case of a person born during the

calendar years 1952 to 1955, pension age shall be sixty two

years<

(c) in the case of a person born during the

calendar years 1956 to 1958, pension age shall be sixty three

years<

(d) in the case of a person born during the

calendar years 1959 to 1961, pension age shall be sixty four

years<

(ii) in the case of a woman born on or before the 31st

December 1951, pension age shall be sixty years<”<

(ii) immediately after the definition “retirement” there shall

be inserted the following new definition>

“ “Second Pension” means the mandatory pension

scheme referred to in article 64C of this Act<”<

(iii) in the definition “Service Pension” in the proviso

thereto, for the words “of such Service Pension<”<” there shall be

substituted the words “of such Service Pension>” and immediately

thereafter there shall be added the following new proviso>

“Provided further that the Second Pension or the Third

Pension which a person may receive shall not be considered

as a Service Pension for the purposes of this Act<”<

(iv) immediately after the definition “single parent” there

shall be inserted the following new definition>

“ “Third Pension” means the voluntary pension plan

referred to in article 64D of this Act<”<

(b) in sub-article (3) thereof, for the words from “For the

purposes of awarding a Survivors’ Pension,” to the words “as the

case may be, was an insured person,” there shall be substituted the

following words>

“For the purposes of awarding>

(i) a widows’ pension or a retirement pension, in

terms of this Act, a person born on or before the 31st

December 1961 and who, during the last ten years ending

on the last day of the calendar year immediately

preceding such person’s retirement or widowhood< or

(ii) an invalidity pension, in terms of this Act, a

person who, during the last ten years ending on the last

day of the calendar year immediately preceding such

person’s becoming an invalid,

was an insured person,”.

Article 16 of the principal Act shall be amended as follows>

(a)

sub-article (2) thereto shall be amended as follows>

(i) in paragraph (b) thereto, for the words “and has not

yet reached pension age< and” there shall be substituted the

words “and has not yet reached pension age<”<

(ii) in the proviso to paragraph (c) thereto, for the words

“consecutive periods starting from the 6th January, 1991

backwards.” there shall be substituted the words “consecutive

periods starting from the 6th January 1991 backwards<”< and

(iii) immediately after the proviso to paragraph (c)

thereto, there shall be inserted the following new paragraph>

“(d) the father or the mother, who have attained

the age of eighteen years and born on or after the 1st

January 1962, has the legal care and custody of a child

who has not attained the age of six years, or the age of

ten years in the case of a child who has been certified by

a medical consultant as suffering, during the period for

which the credit is being requested, from a serious

disability>

Provided that the sum total of such credited

contributions which may be given with regard of each

child to a parent or to both parents together shall not

exceed 104 contributions in any period of two years>

Provided further that in the case of a parent who, to

the satisfaction of the Director, presents a certificate from

a medical consultant of a child suffering from a serious

disability during such period for which credits are

requested, the sum total of such credited contributions

that may be awarded in respect of each and every such

child shall not exceed 208 contributions in any period

of four years>

Provided also that such credits shall only be

awarded insofar as, prior to the pension age, such father

or mother, as the case may be, resumes gainful

occupation for a minimum period equivalent to that

period for which such number of credits would have been

awarded< sohowever that, in the event of the death of

any such parent, such credits shall still be awarded

notwithstanding that the minimum period required in

terms of this proviso for the award of such credits has

not been satisfied.”<

(b) in sub-article (4) thereto, for paragraph (b) there shall

be substituted the following>

“(b) a Class One or a Class Two contribution if

awarded in terms of paragraph (d) of sub-article (2) of this

article, as the case may be<

(c)

a Class One contribution in any other case>

Provided that a credit awarded in terms of paragraph (d)

of sub-article (2) of this article shall only be valid for the

purposes of awarding a pension in terms of Part IV and Part

V of this Act.”.

Article 26 of the principal Act shall be amended as follows>

Amendment

to article 26

of the principal

(a) in sub-article (1) thereof, immediately after the words

Act.

“or the National Minimum Pension” there shall be substituted the

words “in terms of article 50 or to the Guaranteed National

Minimum Pension in terms of article 50A, as the case may be,”<

(b) for paragraph (iv) of sub-article (2) thereto, there shall

be substituted the following>

“(iv) if his Service Pension together with the rate of

Invalidity Pension or Increased Invalidity Pension applicable

in his case is less than the rate of the National Minimum

Pension in terms of article 50 of this Act or the Guaranteed

National Minimum Pension in terms of article 50A of this

Act as is applicable in his case, then notwithstanding the

provisions of the foregoing paragraphs of this sub-article, such

person shall be entitled to the National Minimum Pension or

the Guaranteed National Minimum Pension, as the case may

be, abated by his Service Pension.”<

(c) in sub-article (6) thereto, for the words “A person who

is not entitled to a Service Pension” there shall be substituted the

words “A person born on or before the 31st December 1961 who

is not entitled to a Service Pension”<

(d) immediately after sub-article (6) thereto, there shall be

inserted the following new sub-article (7)>

“(7) A person born on or after the 1st January 1962

who becomes invalid in terms of this Act and who is not

entitled to a Service Pension shall be entitled to a Guaranteed

National Minimum Pension in terms of article 50A of this

Act.”<

(e) sub-articles (7) and (8) thereto shall be renumbered as

sub-articles (8) and (9).

In sub-article (8) of article 30 of the principal Act, for the

word “female” wherever it occurs, there shall be substituted the word

“person”.

In article 44 of the principal Act, immediately after the words

“or the National Minimum Pension or Increased National Minimum

Pension” there shall be added the words “or the Guaranteed National

Minimum Pension, as the case may be,”.

For article 45 of the principal Act there shall be substituted

the following>

“45. (1) A person under the age of sixty-five years, born

on or before the 31st December 1961, shall be disqualified from

receiving a pension under this Part during any period falling after

his pension age and in which he is gainfully occupied if>

(a) he fails to prove to the satisfaction of the Director

that his earnings from such gainful occupation do not exceed

a weekly average equivalent to the National Minimum Wage

as is applicable to persons of eighteen years of age or over

established by a National Standard Order issued under the

Employment and Industrial Relations Act< and

(b) the Employment and Training Corporation had

been duly informed of such gainful occupation.

(2) For the purposes of sub-article (1) no account shall be

taken of earnings derived by such person from membership of any

board, committee, commission or council established by or under

any law or as the Minister may declare by order published in the

Gazette or such classes of earnings as the Minister may declare by

order published in the Gazette.”.

In article 50 of the principal Act for the words “a person who Amendment

of article 50

is not entitled to a Service Pension” there shall be substituted the words of the principal

“a person born on or before the 31st December 1961 who is not entitled Act.

to a Service Pension”.

Immediately after article 50 of the principal Act there shall be Addition

of new

inserted the following new article>

article 50A

to the principal

Act.

50A. Subject to the provisions of this Act, a person

“Guaranteed

born on or after the 1st January 1962 who is not entitled to a

Service Pension shall be entitled to a Guaranteed National

Minimum Pension which shall be payable at such rate being

not less than sixty percent of the National Median Income as

the Minister may, with the concurrence of the Minister

responsible for finance, by order under this article from time

to time establish and in any case, such Guaranteed National

Minimum Pension shall not be less than that established for

the preceding year.”.

In article 51 of the principal Act for the words “less than the Amendment

rate of National Minimum Pension applicable in his case, such a person of

of the principal

shall be entitled to the National Minimum Pension abated by his Service Act.

Pension.” there shall be substituted the words “less than the rate of the

National Minimum Pension in terms of article 50 of this Act or the

Guaranteed National Minimum Pension in terms of article 50A of this

Act as is applicable in his case, such person shall be entitled to the

National Minimum Pension or the Guaranteed National Minimum

Pension as applicable, abated by his Service Pension.”.

Article 53 of the principal Act shall be amended as follows> Amendment

of article 53

of the principal

Act.

(a) in sub-article (1) thereto, for paragraph (i) there shall be

substituted the following>

“(i) of thirty years in the case of a person born on or

before the 31st December 1951< or

(ii) of thirty five years in the case of a person born

during calendar years 1952 to 1961< or

(iii) of forty years in the case of a person born on or

after the 1st January 1962< or”<

(b) in sub-article (1) thereto, paragraphs (ii) and (iii) shall

be renumbered as paragraphs (iv) and (v)<

(c) in paragraph (a) of the first proviso to sub-article (1)

thereto, for the words “the period of years to be taken into account

in accordance with this article” there shall be substituted the words

“in the case of a person born on or before the 31st December 1961

the period of years to be taken into account in accordance with

this article”<

(d) in sub-article (3) thereto, for the words “For the purposes

of this article, and with effect from the 22nd January 1979,” there

shall be substituted the words “For the purposes of this article, in

the case of a person born on or before the 31st December 1961 and

with effect from the 22nd January 1979,”<

(e) immediately after sub-article (3) thereto, there shall be

inserted the following new sub-article (4)>

“(4) For the purposes of this article, in the case of a

person born on or after the 1st January 1962, in arriving at

the yearly average of contributions in terms of sub-article (1)

of this article, the yearly average of contributions required

under this Act for the purposes of awarding a Two Thirds

Pension shall be assessed on any period of forty years between

the first day of his contribution year in which he reaches the

age of eighteen and the last day of his last complete

contribution year before the beginning of his benefit year

which includes the day on which the conditions are required

to be satisfied.”.

In article 54 of the principal Act, for paragraph (a) there shall

be substituted the following>

“(a) less than the full rate of the National Minimum Pension,

inclusive of the additional allowance, payable according to such

person’s marital status, as is specified in the Twelfth Schedule to

this Act< or the Guaranteed National Minimum Pension payable

in terms of article 50A of this Act, as the case may be< or”.

Article 59 of the principal Act shall be amended as follows> Amendment

of article 59

of the principal

(a) for sub-article (1) thereto, there shall be substituted the

Act.

following>

“(1) In respect of persons born on or before the 31st

December 1961, any pension issued under this Part shall be

reassessed annually with effect from the first Saturday in

January of the year of the reassessment as provided for in

sub-articles (2) to (6) of this article.”<

(b) immediately after sub-article (6) there shall be inserted

the following new sub-article>

“(7) In respect of persons born on or after the 1st

January 1962, pensions under this Part with effect from the

first Saturday of January of each year, shall be increased

annually by such sum as corresponds to seventy percent of

the percentage increase in the national average wage as

published by the National Statistics Office established by

virtue of article 9 of the Malta Statistics Authority Act, for Cap. 422.

the previous calendar year plus thirty percent of the inflation

rate as published by the said National Statistics Office for the

previous calendar year< and the provisions of article 90A of

this Act shall not apply to such pensions.”.

Immediately after article 64 of the principal Act there shall Addition

of new

be inserted the following new articles 64A to 64D>

articles 64A

to 64D in

64A. Notwithstanding the provisions of this Part, a the principal

Act.

person who has attained the age of sixty one years but has not

pension age.

yet attained pension age, may after attaining sixty one years

of age claim a pension payable under this Part before attaining

pension age if such person is no longer gainfully occupied

and has since reaching his eighteenth birthday had a total of>

(i) 2080 paid or credited contributions in the case

of a person born on or after the 1st January 1962< or

(ii) 1820 paid or credited contributions in the case

of a person born during calendar years 1952 to 1961.

64B. (1) The Minister shall within intervals not

exceeding the period of five years lay on the Table of the

House a report reviewing the workings of Part V of this Act

within the previous five years together with recommendations,

if any, with a view of achieving further adequacy,

sustainability and social solidarity>

Provided that the first report shall not be submitted later

than the 31st December 2010.

(2) The report mentioned in sub-article (1) of this

article shall be discussed by the Social Affairs Committee of

the House or any other committee substituting the same.

64C. (1) It shall be lawful for the Minister, in

concurrence with the Minister responsible for finance, from

time to time, to make and when made vary any regulations

under this article requiring persons who have not reached

pension age and their employers as the case may be, to make

contributions into Second Pension funds which provide for

the payment of a regular income or other benefits to such

persons and, or their dependants after or upon reaching

pension age and may in particular by such regulations provide

for the rate of contributions payable as well as the method

and times when such payments are to be made.

(2) Any sum or other benefit payable by Second

Pension funds to which such regulations may refer shall not

be considered as Service Pensions for the purposes of this

Act.

(3) Second Pension funds shall be funds governed

by the Special Funds (Regulation) Act.

(4) No regulation, or any amendment thereto or

any substitution or revocation thereof, made under this article

shall have effect unless it has received the prior approval of

the House signified by resolution.

64D. (1) The Minister may, with the concurrence of

the Minister responsible for finance, provide for exemptions

from income tax in respect of contributions made by any

person to Third Pension funds which provide for the payment

of a regular income or other benefits to such persons and, or

their dependants after or upon reaching pension age.

(2) Any sum or other benefit payable by Third

Pension funds referred to in this article shall not be considered

as Service Pensions for the purposes of this Act.

(3) Third Pension funds shall be funds governed

by the Special Funds (Regulation) Act, or the Insurance

Business Act, as applicable.”.

In article 116 of the principal Act, in paragraph (ii) of sub- Amendment

of article 116

article (5) thereto for the words “from the time when the proper rate of of the principal

contribution was due, whichever is the earlier.” there shall be substituted Act.

the words “from the time when the proper rate of contribution was due,

whichever is the earlier>” and immediately after there shall be inserted

the following new proviso>

“Provided that in the case of a person born on or after the 1st

January 1962, any contribution payable in terms of this article shall

be payable at the rate at which the contribution will be payable at

the time of payment.”.

The Thirteenth Schedule to the principal Act shall be amended Amendment of

the Thirteenth

Schedule of

the principal

Act.

(a) for paragraph (1) thereto there shall be substituted the

following>

“(1) In the case of a person>

(a) born on or before the 31st December 1951 who

is to be treated as an employed person, the yearly average

of the basic wage or salary during the best three

consecutive calendar years within the last ten consecutive

calendar years immediately preceding his retirement or

invalidity in terms of this Act, as the case may be< or

(b) born during the calendar years 1952 to 1955

who is to be treated as an employed person, the yearly

average of the basic wage or salary during the best three

consecutive calendar years within the last eleven

consecutive calendar years immediately preceding his

retirement or invalidity in terms of this Act, as the case

may be< or

(c) born during the calendar years 1956 to 1958

who is to be treated as an employed person, the yearly

average of the basic wage or salary during the best three

consecutive calendar years within the last twelve

consecutive calendar years immediately preceding his

retirement or invalidity in terms of this Act, as the case

may be< or

(d) born during the calendar years 1959 to 1961

who is to be treated as an employed person, the yearly

average of the basic wage or salary during the best three

consecutive calendar years within the last thirteen

consecutive calendar years immediately preceding his

retirement or invalidity in terms of this Act, as the case

may be,

on which the required contribution had been paid or deemed

to have been paid in terms of this Act or, if he has been in

employment for less than three consecutive calendar years

within the said last ten, eleven, twelve or thirteen calendar

years, as applicable in terms of this paragraph, during any

such number of consecutive calendar months as may be the

best in his case within the said period, as may be increased by

the applicable wage increases required by law to be awarded

generally in respect of each subsequent year of each of the

said last ten, eleven, twelve or thirteen years, as applicable.”<

(b) for paragraph (2) thereto there shall be substituted the

following>

“(2) In the case of a person>

(a) born on or before the 31st December 1951 who

is to be treated as a self-employed person, the yearly

average of his net income on which the required

contribution has been paid during the last ten calendar

years, or part thereof if he has not been in self-

employment for the whole said ten year period,

immediately preceding his retirement or invalidity in

terms of this Act, as the case may be< or

(b) born during the calendar years 1952 to 1955

who is to be treated as a self-employed person, the yearly

average of his net income on which the required

contribution has been paid during the best ten consecutive

calendar years of the last eleven calendar years, or part

thereof if he has not been in self-employment for the

whole said eleven year period, immediately preceding

his retirement or invalidity in terms of this Act, as the

case may be< or

(c) born during the calendar years 1956 to 1958

who is to be treated as a self-employed person, the yearly

average of his net income on which the required

contribution has been paid during the best ten consecutive

calendar years of the last twelve calendar years, or part

thereof if he has not been in self-employment for the

whole said twelve year period, immediately preceding

his retirement or invalidity in terms of this Act, as the

case may be< or

(d) born during the calendar years 1959 to 1961

who is to be treated as a self-employed person, the yearly

average of his net income on which the required

contribution has been paid during the best ten consecutive

calendar years of the last thirteen calendar years, or part

thereof if he has not been in self-employment for the

whole said thirteen year period, immediately preceding

his retirement or invalidity in terms of this Act, as the

case may be,

as may be increased by the applicable wage increases required

by law to be awarded generally, as long as each such increase

is less than the net increase obtaining from year to year

between one net income and another in respect of each

subsequent year of each of the said last ten, eleven, twelve or

thirteen calendar years, as applicable in terms of this

paragraph, or part thereof during which he was in self-

employment< sohowever that, where during the said last ten,

eleven, twelve or thirteen calendar years he had paid a

contribution on a net income that was higher than that actually

received, the net income taken for the purposes of this

calculation in respect of any such particular calendar year

shall be the higher of such net income.”<

(c) for paragraph (3) thereto there shall be substituted the

following>

“(3) In the case of a person>

(a) born on or before the 31st December 1951 who

is to be treated as a self-occupied person, the yearly

average of his net earnings on which the required

contribution has been paid during the last ten calendar

years, or part thereof if he has not been in self-occupation

for the whole said ten year period, immediately preceding

his retirement or invalidity in terms of this Act, as the

case may be< or

(b) born during the calendar years 1952 to 1955

who is to be treated as a self-occupied person, the yearly

average of his net earnings on which the required

contribution has been paid during the best ten consecutive

calendar years of the last eleven calendar years, or part

thereof if he has not been in self-occupation for the whole

said eleven year period, immediately preceding his

retirement or invalidity in terms of this Act, as the case

may be< or

(c) born during the calendar years 1956 to 1958

who is to be treated as a self-occupied person, the yearly

average of his net earnings on which the required

contribution has been paid during the best ten consecutive

calendar years of the last twelve calendar years, or part

thereof if he has not been in self-occupation for the whole

said twelve year period, immediately preceding his

retirement or invalidity in terms of this Act, as the case

may be< or

(d) born during the calendar years 1959 to 1961

who is to be treated as a self-occupied person, the yearly

average of his net earnings on which the required

contribution has been paid during the best ten consecutive

calendar years of the last thirteen calendar years, or part

thereof if he has not been in self-occupation for the whole

said thirteen year period, immediately preceding his

retirement or invalidity in terms of this Act, as the case

may be,

as may be increased by the applicable wage increases required

by law to be awarded generally, as long as each such increase

is less than the net increase obtaining from year to year

between one net earning and another in respect of each

subsequent year of each of the said ten, eleven, twelve or

thirteen calendar years, as applicable in terms of this

paragraph, or part thereof during which he was in self-

occupation. Sohowever that for the purposes of this paragraph,

in the case of a person who prior to the 1st January 1996, was

a gainfully occupied self-employed person, his annual net

income for each calendar year prior to the aforementioned

date shall be deemed to be as if it were his net earnings.”< and

(d) paragraph (4) thereto shall be deleted and immediately

after paragraph (3) there shall be inserted the following new

paragraphs (4) and (5)>

“(4) In the case of a person born on or after the 1st

January 1962 the yearly average of the basic wage or salary,

or the net income or the net earnings, as the case may be,

during the best ten calendar years within the last forty calendar

years immediately preceding his retirement or invalidity in

terms of this Act, as the case may be, on which the required

contribution has been paid or deemed to have been paid in

terms of this Act or if he has been in employment or self-

employment or has been self-occupied for less than ten

calendar years within the last forty calendar years, during any

such number of calendar months as may be the best in his

case within the said last forty calendar years, as may be

increased by the applicable wage increases required by law

to be awarded generally in respect of each subsequent year of

each of the said last forty calendar years>

Provided that for the purposes of this paragraph, in the

case of a self-occupied person who prior to the 1st January

1996, was a gainfully occupied self-employed person, his

annual net income for each calendar year prior to the

aforementioned date shall be deemed to be as if it were his

net earnings.

(5) (a) For the purposes of this Act, in the case of a

person born on or before the 31st December 1961 whose

retirement occurs on or after the 1st January 2007, the basic

wage or salary or the net income or the net earnings as the

case may be, and the resultant pensionable income or any

amount substituted therefor under the provisions of this Act

shall not exceed Lm6,958 increased by such sum that the

Government may award as a cost of living increase, in the

rate of the national minimum wage as is payable to persons

of eighteen years of age or over under the provisions of the

Employment and Industrial Relations Act< hereinafter in this Cap. 452.

paragraph referred to as the “cost of living increase” as from

the effective date of such increase>

Provided that in the case of a person born on or before

the 31st December 1951, the resultant pensionable income

including any such cost of living increase shall not exceed

the sum of Lm7,500>

Provided further that in the case of a person born during

calendar years 1952 to 1961, the resultant pensionable income

including any such cost of living increase shall not exceed

the sum of Lm9,000.

(b) For the purposes of this Act, in the case of a

person born on or after the 1st January 1962 whose

retirement occurs on or after the 1st January 2007, the

basic wage or salary or the net income or the net earnings

as the case may be, and the resultant pensionable income

or any amount substituted therefor under the provisions

of this Act shall not exceed>

(i) Lm6,958 increased by such sum that the

Government awards as a cost of living increase, in

respect of the years 2007 to 2010 as from the

effective dates of such increases<

(ii) the sum referred to in (i) increased as on

the 1st January of each year, between 2011 and 2013

by one third of the difference between the sum

referred to in (i) and Lm9,000<

(iii) with effect from the 1st January 2014,

Lm9,000 increased annually by such sum as

corresponds to seventy percent of the percentage

increase in the national average wage for the

previous calendar year as published by the National

Statistics Office established by virtue of article 9

of the Malta Statistics Authority Act, plus thirty

percent of the inflation rate as published by the said

National Statistics Office for the previous calendar

year.”.

PART II

CONSEQUENTIAL AMENDMENTS

The Pensions Ordinance shall be amended as follows>

(a) the whole article 2 thereof shall be renumbered as sub-

article (1) of the article and immediately thereafter there shall be

added the following new sub-article (2)>

“(2) Nothing in this Ordinance or in any amendment

made thereto from time to time shall, unless the contrary

intention is explicitly stated, be interpreted as granting, or as

ever having granted, a right, to any person who has been in

the service of Malta or to his legal representatives or

dependants, to a pension, gratuity or other allowance under

this Ordinance, that is not, or that was not at any time, qualified

by the requirement of a creditable performance by such

person.”< and

(b) in sub-article (1) of article 8E thereof, immediately after

the words “referred to in sub-article (2)” there shall be inserted the

words “after having served for at least twelve months in such an

office”, and immediately after the words “the pensionable

emoluments of such officer on retirement shall be,” there shall be

inserted the words “, when such officer accomplishes a creditable

performance,”.

In sub-article (14) of article 36 of the Employment and Amendment

to the

Industrial Relations Act, for the second proviso thereto there shall be Employment

substituted the following>

and Industrial

Relations Act,

“Provided further that>

(a) saving the provisions of paragraph (b) hereof, the

employer can terminate the employment of an employee when

the employee reaches pension age as defined in the Social

Security Act<

(b) notwithstanding the provisions of paragraph (a)

hereof, an employer may not terminate the employment of a

female employee born on or before the 31st December 1951

before she reaches the age of sixty one years.”.

Passed by the House of Representatives at Sitting No. 474 of 5th December,

2006. A NTON T ABONE

Speaker

R ICHARD J. C AUCHI

Clerk to the House of Representatives

Mitbug[ fl-Istamperija tal-Gvern — Printed at the Government Printing Press