A business breakfast organised by The Business Observer entitled ‘Pensions reform: Are we too late?’ is being held tomorrow at the Intercontinental Hotel.

In 2004 the Pensions Working Group appointed by the government had recommended the introduction of a mandatory second pillar system, however this would have reduced employees’ disposable income and add costs to businesses, and the previous government felt that from an economic point of view, the time was not right to introduce it.

The basic pension was revised in 2007 but the second pillar idea was shelved and the focus of the previous government as well as of the current one has since then been to concentrate on an optional private pensions.

Consultant David Spiteri Gingell, who chaired the original Working Group, said the problem was that people are either not aware of what their pension would actually be, or that they chose not to worry about it now.

“People think of what they need to buy now and not worry about their needs in the future. This is why we recommended a more paternalistic view and mandatory saving for your retirement. But it was not welcomed, perhaps because it was mistakenly painted as being a tax. That is not the case. The second pillar would be a personalised account built up by money paid in by both the employee and the employer,” he explained.

The government is planning to go ahead with third pillar pensions – optional private schemes – but the tax incentives being offered were shot down by various stakeholders as being insufficient to encourage people to start saving.

Sources said the incentives proposed were to waive the 15 per cent withholding tax on the interest paid on savings of up to €1,000 into approved accounts – which would work out to a maximum incentive of €6 a year.

During tomorrow’s business breakfast which starts at 8am, Times of Malta head of content (business) Vanessa Macdonald will pose questions to Finance Minister Edward Scicluna and Malta Employers’ Association director general Joe Farrugia.