Finance Minister Edward Scicluna was unequivocal when he spoke at The Business Observer breakfast about pensions: the approach needs to be a continuous updated effort, instead of sporadic and intermittent steps.

He also stressed that long-term stability in the pension system can only be achieved through sustained economic growth.

All this is beyond reproach. However, there is a “but”...

There are two aspects that need to be considered with regards to pensions: whether the government can afford to provide them and whether retirees will be able to maintain an appropriate lifestyle after they finish work.

Discussions on the “pension time bomb” have been under way for years. In 2004, a working group did a profound analysis of the present and future situation. As a result, the government made radical changes to the state pension, which affected both sustainability (by having people work longer, for example) and adequacy (by raising the cap on maximum pensionable income, for example).

The projected average replacement rate by 2060 would have been just 18 per cent with these reforms; it is now up to 45 per cent.

Five years later, it reviewed the impact of the 2007 changes and made 45 recommendations – a number of which were adopted. However, the introduction of mandatory occupational schemes is clearly not on the cards for the foreseeable future, even though they are viewed as the most efficient way to save for supplementary pensions through economies of scale and greater risk pooling. Malta is one of only nine member states that did not offer them in 2013.

And the launch of voluntary private ones has been delayed several times over the past few weeks, with stakeholders warning that the proposed fiscal incentives would not be enough to persuade those who do not currently save to give up instant gratification for a future that seems way, way off...

And yet Minister Scicluna insisted that the situation was not “alarming”. Is he right? What has changed since the dire warnings of the past?

Start with occupational pensions. These would reduce a worker’s disposable income at a time when the island is trying to stimulate domestic demand. It will also add to a company’s costs at the very time that they are seeking to cut them to remain competitive. Add to that the need for the government to offer fiscal incentives – as are 90 per cent of the schemes catalogued by the European Insurance and Occupational Pensions Authority – in the middle of an effort to bring the deficit under control. Can it afford them? The short-term myopia that applies to young savers applies equally to governments that need to balance long-term objectives against short-term Excessive Deficit Procedures.

Population predictions also changed. Modelling seen by The Business Observer reveals that the forecast decline in population after 2030 now shows growth as a result of migration – although the models do not distinguish between irregular migrants, citizenship scheme applicants and Scandinavian gaming company employees.

Two other factors that have changed dramatically since 2007 are the female participation rate and the retirees who have continued to work, both incentivised by government policies. Both these factors will have an impact on the old-dependency ratio, which was originally forecast to grow from 24.1 per cent in 2010 to 60.9 per cent in 2060.

These are such a few of the complex issues and the implications of any measures are long-term. But the government should have taken some unpopular and paternalistic decisions years ago.

The risk is that playing down the time bomb could send the wrong signal. We should be worried enough to work out whether we have enough savings to survive around 20 years of retirement. What else will jog us out of complacency enough to force us to change our savings behaviour?