Opinions

Pension Planning in Malta

Pensions have been in the spotlight for the past couple of years. They are a sensitive topic and will impact us all, if not already, at some point or another. It is in the country’s best interest to ensure that the older generation is financially safe and can have a pension which can support it. The pensions topic has been put under the lens, due to the lack of certainty associated with it. It is not the first time that we hear that today’s younger generation will not have a state pension.

Recently there was a bit of controversy following the Prime Minister’s comments which were interpreted by some that pensions will cease to exist if Malta does not continue to attract foreign investment. Apart from this, there seem to be little efforts to substantially increase pensions which will make life difficult for future generations to cope with the pension received by the state in twenty/forty years’ time, considering the normal course of economic growth. If people are already struggling now, can you imagine if we receive the same amount of pension in the years to come?

In this regard, it would be wise to look towards other avenues than the state pension to ensure you are financially sustainable in your retirement. One way of doing this is by having your own independent pension plan. You can do this by selecting an insurance policy to place /invest your funds with. Such companies are motivated to provide you with the best return on investment so that they can get more clients. When compared to government, these companies have better opportunities to provide a better return on investment since they actually invest the money they are given.

With that said, private pensions can bring about their own problems. In the case of an economic crisis and companies closing shop, there is a risk that people will lose the money they invested. This is turmoil at its best because people would have lost their main contingency for sustainable living. Although one would expect government intervention in such scenarios, the free market is a place where there is a risk when it comes to a retirement fund. Difficulties in the market may prevent you from saving for a private pension, especially if you struggle to make end’s meet. In cases where preference towards private pensions skews significantly, this can also potentially create a new poverty segment, where people will live poorly in their retirement.

One thing is for certain. A master plan for pensions is required to ensure that people are guaranteed a future after they retire.

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