The MIA is urging the government to offer attractive fiscal incentives in order to encourage the take-up of the voluntary third pillar pensions.

Pension reform was put on the table in 2004, but so far only the mandatory state pension has been implemented, with the raising of the retirement age among other changes. However, there are two other reforms yet to be tackled: an occupational second pillar and the voluntary third pillar.

The Finance Ministry launched a consultation process last November with stakeholders. In May, they were briefed about the proposals for the third pillar – and the fiscal incentives that would be offered.

“Of course, private pensions would be welcome as long as the fiscal incentives are enough to encourage people to invest in their future. People will take into account their situation and their tax rate and they will not invest in the products unless they are tax efficient,” Mr Galea said.

The five companies providing life insurance companies have a particular interest in third pillar pensions, especially since they have been providing quasi-retirement products for some time and know the market well.

“Clearly we want to participate when they are launched,” he stressed.

Citadel believes it is well placed to offer customers products to achieve their future financial goals.

“Based upon EU mortality statistics, the current life expectancy of 76.7 years for men and 82.6 years for women is set to rise to 84.6 and 89.1 respectively by 2060. Coupled with reducing birth rates, relying on state pensions alone may prove to be insufficient. Without making our own provision, in future we may expect to be healthier but not necessarily wealthier,” Citadel managing director Angela Tabone said.

The government had promised third pillar pensions in the electoral manifesto but had not mentioned second pillar occupational schemes.

“We applaud government for moving this far at long last. However, the MIA does have some reservations as to whether it is the right approach to start off with the third pillar rather than the mandatory second pillar,” Mr Galea said.

“We would encourage the government to go for second pillar now. Employers are not ready because putting aside money for their own employees means siphoning off some of their profits.

“It would need an awareness campaign and it is not something the insurance industry can do on its own. It has to be done with the government and several other stakeholders,” he said.