State pensions are to rise by €8 weekly next year including the cost of living increase of €5.24 for a total annual increase of €416, the finance minister announced in the Budget speech on Monday.
This increase will benefit over 100,000 retirees, disability pensioners, widows, and others entitled to an age pension, he said.
Caruana said that what pensioners used to receive over a whole year as a pension 10 years ago, they now receive over the first eight payments of the year.
The minister said Budget 2025 will also encourage older individuals to remain in the workforce by improving tax exemptions on their earnings.
As of next year, 80% of the income earned by pensioners who continue to work will be tax-free, up from the previous 60% threshold.
In other measures, the minister said widows' pensions will rise by an additional €3 weekly.
This process aims for all widowed pensioners to receive the full pension their spouse would have received had they lived, by 2027. This adjustment is expected to affect around 7,500 widows and widowers.
As of this year, pensions increase equally for all, based on a mechanism that is 70% wage growth-based and 30% inflation-based. We are progressing toward the goal of equalising the bonus level for all pensioners by 2027.
Minister Caruana said that the adjustment of bonus rates will continue over the next two years, so that by 2027 every pensioner will be entitled to the highest rate of €21.53 per week, which will then be paid along with the pension and any other increases given to pensioners in the future.
Those who have not made enough National Insurance (NI) contributions for a full pension - primarily married women— will see an improved bonus. Around 16,000 individuals will receive a €1,000 bonus if they have nine years of NI contributions, up from €600, with smaller amounts for those with fewer years.
In community care homes, support thresholds for those aged 75-79 will increase from €300 to €350, while the €450 allowance for those over 80 remains unchanged.
In 2025, individuals born before 1962 will benefit from another adjustment in the pension they are due.
Approximately 3,250 service pensioners will also benefit from yet another increase in the portion of their service pension that will not be considered for social security pension purposes. This will be raised by another €200 up to €3,666.