Determining the contributing factors of the Maltese pension scheme

Abstract

Contributing factors of a pension system are of utmost importance with regards to the sustainability of the pension system of a particular country. Such factors include but are not limited to: birth rates, life expectancy, government spending as per GDP, unemployment rates, and aging population amongst others. Hence such factors must be monitored closely to identify if a particular pension system is sustainable or not, and also which factors are to be given the most importance and weighting. The primary form of pensions system in Malta is that of the first pillar pension, where employers and employees pay National Insurance contributions, and the state, in return, provides a pension after the pensionable age is reached. However, the factors analyzed in this dissertation show that since life expectancy in Malta is increasing and birth rates are decreasing, such pension system will not remain sustainable, and hence a solution has to be found. This can be done by introducing new pension reforms such as, second or third pillar pension systems. Moreover, in this dissertation comparison will be made to three other countries, Denmark, Japan and France, which have different characteristics in their pension contributing factors. Also, such countries have been through different reforms and hence one can analyze the benefits of each country and discern how these may be included in the Maltese system to make our system as sustainable as possible. With regards to the research methodology for this dissertation, it will be mainly viewed from a desk research perspective, where three different countries will be analyzed with respect to their pension system, followed by a comparison of the contributing factors that make up the different pension systems.