The government has commissioned the World Bank to start work this month on an actuarial study of the two-thirds pension system in Malta; an aggregated macro-economic study on fiscal incentives for voluntary pensions; and a study on education for personal financial management and savings.

Parliamentary Assistant Stephen Spiteri, speaking at a seminar on pensions reform, said today that the government's Pensions Working Group was beavering away with the next stage of pensions reform and consulting the various stakeholders.

He said that while it was therefore too early to present the government's thinking, it would be good to consider a number of questions.

Malta, he pointed out, was still a first pillar pension system where people working today were paying the pension of people who were in retirement today. In turn people working today hoped that there would be enough people working when it was they who were in retirement.

"The goal that we seek in this pensions system reform journey is that of securing adequacy whilst retaining sustainability. We need to safeguard the adequacy of the pensions of future generations: our children, grandchildren, perhaps even grand-grandchildren."

"Thus, do we leave it to the young and others to decide and hope that they take the necessary decisions to provide protection for their future even though research shows that people are too often too caught up dealing with the here and now to worry about what will happen in 30, 20 years time? Or, shall we play the ‘paterfamilias’?

"Do we introduce incentives to render it attractive for people to save? Saving for retirement is differed income," he said.

Dr Spiteri also spoke on what was achieved so far.

He said the retirement age had been reformed across two groups transitional and switchers – where the retirement age with regards to the latter was raised to 65 years. Men and women were placed on the same retirement age.

An opt out for early retirement was introduced to account for those jobs where age rendered it difficult to work, subject however to 40 years of contribution accumulation and the person reached 61 years of age.

There had also been an incremental increase in the calculation of the contribution average of the Two-Thirds pension from 30 years to 40 years for the switchers group. Again, for persons in the switchers group the contribution average assessment was increased to 40 years.

The calculation of the applicable pension income was also increased incrementally – reaching the best 10 calendar years of basic wage or earnings over 40 years of insurance.

"Importantly," Dr Spiteri said, "we changed the Maximum Pensionable Income. In terms of the Switchers – this will increase from the coming year over three equal tranches to €20,970 by 2014 and subsequently by an indexation mechanism that is made up of 30%wages:70%inflation.

For the Transitional group, the Maximum Pensionable Income is allowed to increase by inflation to a threshold of €20,970.

In the case of the Exempt Group – the 55 years and over who were not affected by any of changes of the reform – the Maximum Pensionable Income was released from its €16,077 ceiling to increase by inflation to a threshold of €17,470.

Moreover, to encourage people who retire to remain in the labour market changes the government had amended the law to allow any retiree – including those in the Exempt category – to work and earn whatever income whilst retaining the full pensionable income.

He also pointed out that mothers in the Switchers Group were now able to have their pension credited for two years for every child under six years of age subject to the condition that she returned to work for the equivalent amount credited.

Furthermore, Dr Spiteri pointed out, the Guaranteed National Minimum Pension was now indexed to 60% of the National Median Income.

The seminar was organised by audit and advisory firm PKF Malta.