Pension measures to cost government about €20 million over two years
Budget 2017 pension measures are to cost between €21 and €22 million over a period of two years, Finance Minister Edward Scicluna explained at a press briefing yesterday.
A total of 20 budget measures are aimed towards pensioners and the elderly, ranging from tax cuts to lowest pension earners to subsidies for home carers.
Finance Minister Edward Scicluna together with Family Minister Michael Farrugia gave an overview of how each measure is going to impact the more vulnerable sections of society.
Professor Scicluna explained that a certain percentage of expenditure increases from year to year irrespective of new measures introduced.
Therefore, a small proportion of the €20 million spent in this sector is unavoidable.
This amount of spending may seem high however in view of the €2,401.8 million spent on government expenditure between January and August 2016 the €20 million figure is put in the relevant context.
An interesting new measure which has been proposed for 2017 is the option for pensioners to buy government bonds at rates of interest that are more favourable then current market rates.
Professor Scicluna said that while he cannot reveal the rate of interest but confirmed that they are more favourable and that the bonds will mature after six years.
He said this is the best option for pensioners who wish to earn something extra and for the government.
Measures aimed at helping the elderly and pensioners include extending subsidies to elderly people who employ carers in their home, for a maximum of €5,200 on a full time basis, the launching of pilot project involving 100 families will see the drawing up of a seven-year contract for low-income families renting property from private individuals, carers allowanced increasing by €90 per week, the encouragement of having elderly people live at home through allowances for carers to cover people with different levels of dependence, a €300 grant to be given to people aged over 75 and pensioners will also be getting a rise in their pension by €225 per year through the cost of living adjustment and a supplementary benefit.
Persons 61 years or older will not be paying income tax on their pension unless up to €13,000.
In the event that the pensioner has some other form of income, the first €1,000 will be tax free. This reform will be spread over two years and it is expected that pensioners will have saved up to more than €585 each year.
Single pensioners will benefit from tax reductions for those who earn up to €10,500 yearly, which will increase to €13,000 in 2018.
Dr Farrugia spoke of the upwards revision of thresholds for means tests of assets.
For couples, the new threshold is assets worth up to €7,000 and for single persons €1,700. He said that this will impact some 1,000 people.
Professor Scicluna explained that three years of government measures that incentivised people to enter work, such as free childcare, has had a distributive effect and leads to an increase in disposable income.
People are encouraged to invest in private pension schemes in view of this. The in-works benefits could lead to a situation where increase in income is not necessarily reflected in future pensions.