Workers and employers could soon start chipping in towards a private pension fund, over and above national insurance contributions, as the government prepares to present a review of the pensions’ system to Parliament.

The Minister of Education, Employment and the Family, Dolores Cristina said a draft review report on the changes introduced in 2006 had been forwarded to the government and would be presented to Parliament by the end of this year. This follows a meeting of EU Social Affairs Ministers in Brussels where pensions were discussed.

Although no decisions have been taken, it is expected the second phase of the pension reform, introducing the concept of private pensions, will be implemented following a consultation period.

“The working group entrusted with the review has concluded its work and has given me a draft of its findings and recommendations,” Mrs Cristina said.

“This document will be tabled in Parliament before the end of the year, as established by law. There will be a consultation phase during which feedback received will be analysed and evaluated by the working group, which is, once again, making use of the services of the World Bank,” she said.

The working group, chaired by David Spiteri Gingell, the main author of the 2006 pensions’ reform, has been working for the past months and met a considerable number of stakeholders, including over 30 constituted bodies and NGOs. Some have already submitted their feedback and a presentation was also made to Labour Party representatives.

According to a European Commission report issued in June, Malta’s pension system is not sustainable and adequate in the long-term, although the changes introduced in 2006 were deemed to be a step in the right direction.

Following the Commission’s opinion, Prime Minister Lawrence Gonzi had said the government would soon be considering the introduction of the second pillar of the pension reform following a review of the first five years.

Hinting that more changes were on the way, Mrs Cristina said the draft review showed the 2006 measures had a positive outcome in addressing the issues of adequacy and sustainability.

“We now have to move forward to ensure future pensioners are guaranteed a decent standard of living. The year 2035 may seem far away but unless we introduce further measures we will be doing a disservice to younger generations, our future pensioners,” she said.

Following almost 10 years of discussions, in 2006, the government introduced changes to the Social Security Act to start a gradual but radical implementation of a pensions’ overhaul. The first phase, already being applied, consists of the gradual increase of the retirement age from 61 to 65 years and the regular contribution period to the state pension scheme from 30 to 40 years.

The reform also includes the introduction of a second pillar, requiring the need of private pensions over and above the national insurance contributions that will sustain the basic pension the government still guaranteed for everyone to act as a safety net.

According to the law, the government is legally bound to carry out periodic five-yearly strategic reviews of the pension system so changes introduced reflect evolving circumstances. The law stipulates that the first review must be carried out and presented to Parliament no later than December 31, 2010.

Mrs Cristina insisted decisions would only be taken at the end of the consultation phase, which will start with the review’s publication.