In line with other European countries such as Italy (IT0309203F [1]), France (FR0309103F [2]) and Germany (DE0305104F [3]), the Maltese government has decided that it needs to reform the state pension system. In 2002, expenditure on pensions awarded under the Social Security Act accounted for 7.71% of GDP, compared with 6.81% in 1992. The existing pension system will become less sustainable in the coming years. In Malta, there are currently five persons of working age for every pensioner, a figure that will diminish to three workers to every pensioner by 2025.[1] www.eurofound.europa.eu/ef/observatories/eurwork/articles/government-seeks-further-structural-reform-of-pension-system[2] www.eurofound.europa.eu/ef/observatories/eurwork/articles/pension-reform-adopted[3] www.eurofound.europa.eu/ef/observatories/eurwork/articles/rrup-commission-proposes-later-retirement-age
In late 2003, the Maltese government, under pressure from the social partners, agreed to postpone a decision on pension reform proposals until June 2004. Proposed changes include increases in the retirement age.
In line with other European countries such as Italy (IT0309203F), France (FR0309103F) and Germany (DE0305104F), the Maltese government has decided that it needs to reform the state pension system. In 2002, expenditure on pensions awarded under the Social Security Act accounted for 7.71% of GDP, compared with 6.81% in 1992. The existing pension system will become less sustainable in the coming years. In Malta, there are currently five persons of working age for every pensioner, a figure that will diminish to three workers to every pensioner by 2025.
The government received proposals on pensions reform from a special Welfare Commission and seemed to be planning to start introducing them in the 2004 state budget at the end of November 2003. The report proposed, among other measures, that the retirement age should be gradually increased from 60 for women and 61 for men to 65 for both sexes by 2020, and that the national insurance contribution system be revamped.
However, trade unions pressured the government to refrain from introducing changes at this stage. The Union of United Workers (Union Haddiema Maghqudin, UHM) argued that a sound pensions system could not be agreed for another six months, while the General Workers' Union (GWU) said that changes to the system should not occur before 2005. The social partners, including employers’ organisations, accused the government of suddenly rushing through its pension reforms after years of procrastination. Trade unions argue that government has not passed the necessary information to the Malta Council for Economic and Social Development (MCESD), the country’s highest forum for tripartite concertation.
Actuarial studies are currently being carried out to establish the sustainability of the pension reform proposals. They are expected to be ready in January 2004. Under pressure from the social partners, the government has agreed to postpone the decision on pensions reform to June 2004.
Eurofound recommends citing this publication in the following way.
Eurofound (2004), Pensions reform decision postponed, article.
