Two years ago the Government appointed a group of experts with the aim of drawing up a comprehensive strategy aimed at addressing current and future challenges of our pension system.

This Pensions Strategy Group has now completed its task and has presented a set of reforms to the pension system directed to secure adequacy, sustainability and solidarity over the long term.

The Ministry for the Family and Social Solidarity said that this pensions strategy seeks to incentivise savings in voluntary pension schemes and working beyond retirement age. It also maintains the present retirement age of 65 and rules out increasing social security contributions as well as compulsory second-pillar pensions, which are supplementary pensions paid by employers and employees.

The strategy is built on the principles that state pensions should be a solid source of income for pensioners, but should not be the only one.

It also sought to strike a just balance between the amount of time in which contributions are paid and the amount of time benefits are received, and to reform the system in such a way that it would be capable to evolve to address future developments.

The strategy includes a total of 27 recommendations, divided into four categories:

reforms addressing social needs and issues related to society and work;

reforms addressing the sustainability of the pension system;

reforms to encourage saving up for complementary pensions; and

reforms to address the problems faced by those who are already pensioners.

At present, those born on 1962 or later are required to make 40 years of social security contributions to be entitled to a full pension, but the reform proposes that those born on 1965 or later should contribute another year.

However, the proposed reforms would also increase the contributions credited to those who stop working to take care of their children, up to 5 years for their first child, 4 years for their second and 3 years for their third.

It would also credit full-time studies in courses which are MQF Level 5 (undergraduate diploma or certificate) or higher. Three months of contributions are to be credited for every year of studying MQF Level 5 (undergraduate diploma or certificate) or 6 (bachelor’s degree) courses, going up to six months per year of Level 7 (master’s degree) courses, and a full year for Level 8 (doctoral degree) ones.

Those entitled to retire between the age of 61 and 65 could improve their pension by up to 12% if they continue to work and forego their pension while they do so. Pensions could be improved even further if people keep working without receiving a pension beyond the age of 65.

At present, only those born on 1962 or later are entitled to a guaranteed national minimum pension (GMNP), but the reform proposes gradually extending this to older people, addressing the most vulnerable pensioners first. Those who would be 76 or older on 1 January 2016 would start receiving the guaranteed national minimum pension next year, and this would become universal by 2027.

The proposed pensions strategy is now open for public consultation and the relevant documents can be accessed here.

The general public is invited to give its feedback about the proposed reforms and make its suggestions.

Feedback can be sent by 17th July 2015, either by email on pensions.strategy@gov.mt or by post to:

Pensions Strategy

Office of the Permanent Secretary

Ministry for the Family and Social Solidarity

310, Republic Street,

Valletta VLT 2000

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