Malta risks being one of the EU countries worst hit by an aging population in 50 years' time, according to study on aging issued by the European Commission.
By 2060, Malta would have to fork out 13.4 per cent of its gross domestic product on pensions, almost double today's expenditure of 7.2 per cent.
The study identified Malta as one of the most severely-hit EU member state in relation to increased old age expenditure together with Luxembourg, Greece, Slovenia, Cyprus, Romania, Spain, Ireland and Belgium, which would all see a rise of almost seven per cent in public spending related to aging.
The study noted that, although Malta's population was expected to decrease by 2060, it would have nine pensioners for every 10 working citizens.
Although some reforms in pension legislation had been implemented, this was not enough and Malta had to do more to avoid a severe strain on its public finances.
The EU study showed that Europe's population was living increasingly longer and in better health.
However, it stressed that aging populations also posed major economic, budgetary and social challenges.
While the first priority was to tackle the recession, the EU could not lose sight of the necessary policies and reforms to ensure the elderly had decent pensions, access to health and long-term care without putting an unsustainable burden on future generations.
The study said governments had a window of opportunity before the baby boom generation retired to implement policies that addressed the challenge while being compatible with the need to support the economy at this juncture.
Projections agreed with member states put the increase in age-related expenditure at an average of 4.75 percentage points of GDP in the EU by 2060.
In the same period, the EU would move from having four people of working age for every person aged over 65 to a ratio of two to one.
According to the Commission, aging would already start affecting most EU economies in the coming decade.
Although, by 2060, the EU population was expected to be roughly the same size as today, it would be much older. Productivity would be the main factor in economic growth, with the potential level falling sharply within the EU, with major differences between countries.
At the same time, the cost of transfers and services for elderly would increase significantly for member states' public purses. Some member states would be worse affected.
Malta was put in the most affected category. Eight others (The Netherlands, Finland, the Czech Republic, Lithuania, Slovakia, the UK, Germany and Hungary) would see a rise of between four and seven per cent and the remaining 10 (Bulgaria, Sweden, Portugal, Austria, France, Denmark, Italy, Latvia, Estonia and Poland) would see increases of four per cent or less.
The EU Commissioner for Economic and Monetary Affairs, Joaquin Almunia said the increase in unemployment and the deterioration of public finances made it all the more important to renew the EU's commitment to address the demographic challenge.