Prime Minister Lawrence Gonzi indicated yesterday that the government would be continuing the process of pension reform.

Speaking at a PN activity in Gozo, Dr Gonzi did not give further details on the pensions reform process but included it in the various reforms being undertaken by the government.

The pensions reform was launched almost five years ago when the retirement age was gradually raised and the process was launched for the raising of the thresholds of pensionable income.

The reform was based on three pillars of which only one has been brought into force so far – that of government-funding pensions. The law, however, also provides for individual and employer contributions into privately run pension schemes, one of which would be compulsory and the other a voluntary top-up. Regulations would also need to be issued on fiscal incentives that may be applied to encourage people to contribute to the private schemes.

The pensions reform was not brought fully into force because of economic conditions when the law was enacted. Social Policy Minister John Dalli later set up a pensions expert committee to prepare the ground for the new regulations.

"We should be in a position to conclude the consultation process with all constituted parties and implement the second tier of the pension system within three years," Mr Dalli had said in June 2008.

The purpose of the second and third tier systems is to ensure that pensioners continue to enjoy an adequate pensions without straining public finances as the proportion of pensioners to workers increases.