How a pension benefit distorted Malta’s gender gap figures

Malta’s apparent widening gender pension gap is largely the result of a statistical distortion caused by a new benefit, a Central Bank of Malta study argues.

The study by Aaron Grech, chief officer of the CBM’s Economics Division, focuses on the deficiency contributory bonus (DCB), introduced in 2015. The bonus is designed to provide an annual payment averaging around €800 to elderly individuals, mainly women, who had insufficient social security contributions to qualify for a full pension.

Eurostat data shows Malta’s average gender pension gap increasing from about 31.5% in 2015 to 40.3% in 2024, the highest in the EU compared with an EU average of around 24.5%.

At face value, this suggests a worsening position for women. However, Grech’s analysis argues that the change is driven by how beneficiaries are counted rather than a real decline in pension outcomes.

Before the DCB was introduced, thousands of women receiving no pension income were excluded from official pension statistics. Once the scheme was implemented, around 14,000 women were brought into the pensioner population for the first time. Because the DCB is significantly lower than a full pension, their inclusion mechanically reduced the average female pension and widened the measured gap.

The report describes this as a statistical artefact—policies that extend basic income support to previously excluded groups improve coverage but can lower average values, creating a misleading impression of deterioration.

A different picture emerges when using the median pension gap, which compares the “typical” pension received by men and women. On this basis, Malta ranks fifth in the EU rather than first, and the gap has actually improved slightly, falling from 36.2% in 2015 to 34.9% in 2024. This contrasts with the worsening average gap and suggests gradual improvement for the typical female pensioner.

The study notes that Malta’s median gap remains above the EU median average of 24.9%, but argues it provides a more stable indicator because it is less affected by extreme values, such as the large number of small DCB payments.

Beyond methodological issues, the Central Bank highlights broader improvements. Median incomes among older women have risen significantly over the past decade, while deprivation rates have declined, and the pension coverage gap between men and women has narrowed sharply from 24.6 percentage points in 2015 to 6.3 points in 2024.

Grech concludes that while inequalities persist, Malta’s worsening gender pension gap largely reflects the unintended statistical consequences of policies that have expanded pension coverage for women rather than evidence of declining retirement outcomes.

Written by James Debono