It is fortuitous for the Maltese voter that, at a time when politicians compete with one another to promise the greatest number of goodies to the greatest number of people if elected, regardless of cost, there are independent international credit rating agencies to issue salutary warnings about matters that the major parties would prefer to leave unmentioned.

This has happened with the public debt and has just come to the fore again with a warning of the economic consequences of a rapidly ageing population.

Credit agency Fitch has just warned in its report, Ageing Costs: The Second Fiscal Crisis, that Malta could face the most severe fiscal shock in the long-term unless the costs of ageing are addressed.

Without reforms, population ageing will cause potential economic growth to decline, thus exacerbating the fiscal challenge as a smaller productive workforce will have to provide for the pensions, and the health and social services, of an increasingly larger, non-productive, retired section of the population.

Advances in healthcare and social conditions will increase life expectancy and, therefore, add to the number of years when a pension, and other free health and social benefits, will be payable.

Fitch warns that, without major pension reforms, it could possibly have to take “negative rating actions” over the next decade against those countries, including Malta, facing the most pressing demographic pressures.

It said that “while a successful resolution of the current fiscal crisis” remains most important, countries that fail to address the impact of long-term ageing “face a second, longer-term fiscal shock”. Without reforms to boost labour productivity and participation rates, GDP growth is expected to decline in Malta. The situation is pressing and serious.

The Government has already turned its face against a European Commission recommendation to “take action, without further delay, to ensure the long-term sustainability of the pension system, comprising of: a significant acceleration of the progressive increase in the retirement age compared with current legislation; a clear link between statutory retirement age and life expectancy; and measures to encourage private pensions savings”.

For its part, the Labour Opposition is on record as saying that, rather than raising the retirement age above 65, as the EU requested, it would focus on economic growth to solve the problem.

In the face of such strong recommendations from organisations with no political axe to grind, politicians of both parties should face up frankly and responsibly to the impact on pensions of a rapidly ageing Maltese population. The projected decline in Malta’s working age population will reduce growth and tax revenues at the same time as the fiscal burden of a larger population of elderly people is increasing. A bipartisan approach is urgently needed because whichever party is elected to power in six weeks’ time will have to confront the issue.

While Malta should strive for economic growth to pay for its generous welfare state, this seems unlikely on its own to provide the long-term solution to the widening demographic gap. Nor, desirable though it is, is it likely that increased participation in the workforce by women will provide the answer.

It would be sensible for steps to delay the age at which pensions become payable, together with a combination of other actions, to be taken sooner rather than later. The corrections must bridge the forecast gaps imply a need for a critical reassessment of how pensions are funded and the age at which they are provided.