The issue over the future sustainability of pensions is not being taken seriously enough. Nor is the government taking the necessary action to ensure the present rate of the national contributory pension is adequate enough for pensioners to meet today’s needs. Equally, if not more, disturbing is that a substantial segment of the working population has no retirement plan and that an even greater portion has not even heard of a pension fund.

Taken together, these and other factors, such as the widespread resistance to the introduction of a second pillar pension, depict a picture of a country that is miserably failing to get to grips with a multi-faceted problem that is bound to get bigger over the years. To add insult to injury, the government appears to be looking at the representative body of the pensioners, representing in all over 90,000, with an attitude that borders on the disdain.

Just three days before Christmas, Prime Minister Joseph Muscat said that, as the country was reaping the fruits of a soaring economy, the government planned raising pensions again. Pensioners, he declared, deserved better and the government would be delivering. While getting the full cost-of-living rise, as given annually to workers, had gone a long way towards settling an injustice that had been festering for years, the annual rises given are nowhere near the amount required to make the pension rate adequate. One in three adults have experienced a situation where their income does not cover living expenses.

Had the Prime Minister listened thoroughly to what the pensioners’ representatives had to say about their plight, he might have come out with concrete proposals on how to tackle the pension problem rather than just saying pensioners he had met in the weeks before were happy with the year-to-year increases. The fact is that, despite the many reports about pensions that have been drawn up over the years and the countless number of meetings held to analyse the situation from all angles, the country has not as yet made any real headway in the right direction.

Only a few days ago, a top executive of a life insurance company warned that, as the situation stands now, drastic action would have to be taken to solve the pension crisis within five years. He had in mind the enrolment of workers in saving schemes, or what he called “soft compulsion” schemes that incorporate opt-out clauses. Such schemes, meant to ensure additional regular income to employees, already exist in Britain, Australia and New Zealand.

The subject is most interesting and would need to be further explored but since employers have been resisting the introduction of a second pillar pension for years and given that they would also be required to contribute to any proposed superannuation scheme, what are the chances of introducing such a system in Malta?

The challenge has to be faced head on, more so in light of reports that the response to the voluntary occupational pension schemes (third pillar) has not been very encouraging. When considering that up to 45 per cent of the population have no retirement plan and that as many as 73 per cent have never heard of a pension fund, it becomes all too clear that Malta badly needs to see how to take the problem seriously.

This is a Times of Malta print editorial