The sustainability of pensions depends on continued economic growth and the development of the third pillar," Malta Chamber of Commerce, Enterprise and Industry president, Tancred Tabone said.

In a statement, the chamber said it supported the introduction of voluntary (third-pillar) pensions to supplement the present system.

Fiscal incentives and a sound regulatory system had to be in place prior to implementation to maximise take-up. With these and other important safeguards, international experience showed that a third pillar:

Increased the income of individuals once they were past retirement age;Alleviated the financial burden on the social security system; andStimulated private savings while creating new forms of business activity.

With regards to the compulsory second pillar, the chamber commented that this could have serious social and economic implications.

Consequently, it was not in a position to consider this alternative until such time that precise details were made known about its possible implementation.

It said it had been consistently stating that Malta had to place income generation ahead of income distribution.

In this regard, it firmly believed that the sustainability of pensions via the first and third pillars needed to be constantly supported by policies aimed at economic expansion.

This would lead to higher employment generation for a better spread of the social security burden. Higher female participation should be encouraged to increase the gainfully occupied population and a selective immigration policy to fill important gaps in high-value added sectors of the local economy should be implemented.

The chamber warned that, given the importance of economic expansion even for pensions, two extremely important factors had to constantly underpin the decision making process to ascertain social and economic balance.

Stakeholders needed a blueprint with clear timeframes and all relevant information to be in a position to plan adequately for the future. The timeframes would both employers and employees to take the necessary steps to fall in line with the necessary changes, as well as ensure that any commitments entered into were not rendered unsustainable or unaffordable by any policy measure decided upon and announced at a later date.

The matter also had to be tackled holistically. Pension reform was closely linked to other sensitive policies such as health, wage indexation, education and other areas that affected business and the economy.

Therefore, the way forward had to be charted in a holistic manner to ensure that the effects on stakeholders were well planned and complimentary, rather than conflicting.

Mr Tabone said that, "whilst the reform is underway, conflicting decisions such as policies facilitating early retirement in the public sector, must at all costs be avoided."

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