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Gemma webinar social security contributions what is important to know

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Gemma webinar social security contributions what is important to know

  1. 1. Pamela Pace Assistant Principal Pensions | Benefits Department
  2. 2. Insurability…  Part-timers  Employed  Self-employed – Self/occupied  Exemptions  Employment abroad  Early/Voluntary Retirement Schemes  Credits
  3. 3. Il-Bolla … • The social security contribution has traditionally been referred to as 'bolla' in Maltese. • 'Bolla' refers to the 'stamp' that used to be manually affixed to a person's notebook showing the number of contributions a person paid. • A social security contribution is also referred to as SSC or NI, in day-to-day language and in abbreviated terms. • All persons who are over the age of sixteen (16) and who have not yet attained retirement age of 65 years, and who are in insurable employment, are liable to pay Social Security Contributions. • Employees who are employed for less than eight (8) hours in any one calendar week are not considered as being in insurable employment for Social Security Contribution purposes and are exempted from paying an employed social security contribution. • Each year of gainful occupation will carry 52 or 53 social security contributions (depending on the annual number of Mondays).
  4. 4. Type of Social Security Contributions: Two types:  Class I Social Security Contributions  Class II Social Security Contributions
  5. 5. Class I Social Security Contributions Social Security Contributions by individuals who are employed persons are called Class I Contributions and are paid by direct deductions from the same employees’ salary. Rates for 2020 https://cfr.gov.mt/en/rates/Pages/SSC1/SSC1-2020.aspx
  6. 6. Class II Social Security Contributions Self-Occupied Persons: persons who earn income from Trade, Business, Profession, Vocation or any other economic activity that exceeds €910 per annum. Self Employed Persons: persons who receive income from rents, investments, capital gains or any other income. https://cfr.gov.mt/en/rates/Pages/SSC2/SSC2-2020.aspx Rates for 2020
  7. 7. Overtime earnings have no effect on SSC Rate The table shows that the €300 earned in overtime has been ignored. Social Security Contribution rate due is calculated on the Basic Weekly Wage which excludes allowances, bonuses, and/or overtime earned in a particular week.
  8. 8. Part-time Employees Anyone who works less than 40 hours per week and who earns less than the National Minimum (weekly) Wage (€179.33 weekly or €4.48), has the option to pay their share of social security contributions on a pro-rata basis, 10% of their basic weekly wage as per Category B below. When paying social security contributions by 10% pro-rata, these contributions are different from the full contributions paid at the applicable full weekly rate and eventually WILL NOT be considered as one contribution per week.
  9. 9. Social security contributions are shown on the employee’s contribution record. • It’s divided into 3 main columns • 1st column - the year when contributions were made • 2nd column – number of contributions by Class 1 – employees Class 2 – self-employed / self- occupied Class 3 – voluntary – retrospective • 3rd column – credits by class
  10. 10. Calculation of a Contribution Average • The calculation of a Contribution Average is assessed on the number of contributions / credits from age 18 up to the date of retirement. • To be eligible to a full two thirds pension, the contribution average must be at least 50 Any contribution average from 15 to 49.99 will result in a decreased amount of Two-Third’s Pension (TTP) rate
  11. 11. Retrospective Payments are currently employed or self-occupied. are 59 years up to and including 65 years of age decide to pay contributions up to a maximum of 5 years (260 contributions) Contributions may only be paid for periods of residence in Malta Applicable rate due is the current Class 2 Social Security Contribution Rate SA, which in 2020 stands at €30.77 per contribution. If you are employed or self-occupied, you have the option to pay Social Security Contributions (SSCs) to fill any gaps in your contribution record which will eventually improve your pension rate. The scheme is applicable for those persons who:
  12. 12. Who is exempted from payment of contribution If their annual earnings exceed €910, they are personally responsible to pay a self-occupied contribution. If their annual earnings do not exceed €910 are exempted from payment of contributions Employees who carry out less than eight (8) hours of work in any one calendar week are not considered as being in insurable employment for Social Security Contribution purposes. BUT
  13. 13. Employment abroad… Maltese employed abroad in a non EU country an EU country EU institutions WHO UN institutions who maintain an ordinary residence in Malta have the option to pay a Class I contribution by virtue of Article 13 of the Social Security Act (Cap 318). Payment is carried out in the same manner as that applicable to self-employee/occupied persons on the form below.
  14. 14. Early/Voluntary Retirement Scheme Persons who retire from employment through an early/voluntary retirement scheme have the option to continue paying a Class II contribution as self-employed persons by virtue of Article 3. They may:  choose to pay social security contributions up to retirement age. A copy of scheme would be required together with a request to pay national insurance contributions. Request should include that registering for employment with ETC will not take place;  register for employment with JOBS+ BUT during the first six months, a request should be sent to the Department of Social Security whereby a bill for the payment of social security contributions for the first six months is duly issued. After the lapse of six months these contributors are eligible to unemployment benefits (UB) and social security unemployment credits.
  15. 15. Credits Credits are credited contributions that protect your social security contribution record sheet. You get your contributions covered if:  you stay at home to care for a child up to six years of age  the medical board certified you as being incapable of performing full-time or part- time employment due to health reasons.  are a widow for period during which you do not remarry and provided your deceased husband had paid 156 contributions prior to his death  an ex-member of the Malta Police Force or of the Armed Forces of Malta who retired from the service and did not resume employment.  you are in receipt of sickness benefit  you are self-occupied and in receipt of injury benefit  you lost your job through redundancy and registering for work  you have furthered your studies  performance of volunteering work in Malta or abroad  you are in receipt of carer’s pension
  16. 16. More than just pensions  Unemployment  Benefit/Special Unemployment Benefit  Injury on Duty Benefit  Marriage Grant  Maternity Benefit  Maternity Leave Benefit  Contributory Retirement Pension  Widow’s Pension  Invalidity Pension  Grant paid to persons who do not qualify for a pension due to a low contribution average  Non Contributory Benefits - Age Pension  SocialAssistance/Unemployment Assistance  Subsidiary Unemployment Assistance  Payment to Residents of a Therapeutic Community  Tapering of Benefits  Sickness Assistance  Milk Grant  Free Medical Aid (Pink Form)  Schedule 5 (Yellow Card)  Assistances for a Disability  Assistance for the Visually Impaired  Disability Assistance  Carers Benefits  Children Allowance  Supplementary Allowance  Energy Benefit  In Work Benefit  Senior Citizen Grant
  17. 17. Pamela Pace Assistant Principal Pensions | Benefits Department Thank you… For more information about Social Security Contributions visit www.gemma.gov socialsecurity.gov.mt irdpubserv.gov.mt/services/ssccalculator.aspx To address specific individual queries Call 153 or email to gemma@gov.mt social.security@gov.mt

Editor's Notes

  • What happens when someone would not have paid SSC because they were studying abroad for say a year?
  • How do they go about paying for their self-occupied contribution?
  • How do they go about paying for their self-occupied contribution?
  • What happens if they do not pay SSC?
    If they pay SSC in Malta, does it mean that they don’t pay in the country they are working in?

  • What does one need to do to be eligible for credits?

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