A study on how Maltese society is gearing towards financial independence following retirement

Abstract

One of the current concerns in Malta is the lack of structured planning for retirement and the effect this will have on an individual when the time comes to retire. The National Statistics Office forecasts that by the year 2025, the percentage of persons over 65 is expected to increase to 20% and will continue to increase to 24% by the year 2050. By time, this will create a gap in the Maltese workforce as there will be an abundance of individuals who would be retiring simultaneously and insufficient workers to contribute to the pension pool. This may create problems in the healthcare and pension payment system. Some individuals, particularly the younger generations within the working population need to take better care of their future financial security needs, so that they will be financially independent on retirement. This study sought to analyse the perception of the Maltese working population with regards to the current pension issues and determine other sources of income people are likely to choose to support them on retirement. Following extensive research, this study investigated the situation locally with regards to the sustainability and adequacy of the state pension. Using available data as well as purposely-designed questionnaires, various sources were used to support arguments. General findings show that: - 60% are concerned that they will not be able to cope financially in retirement. - Although people recognise that they need to save more for their retirement, 65% do not have a personal private arrangement. Of particular concern is the cohort of youngsters. This is because they feel that they are unprepared when it comes to retirement planning. However, 62% are willing to take an alternative pension such as a retirement plan. - 69% have confidence in the Social Security system. - 53% agree that the retirement age should remain the same. - 76% suggests that the state should provide for one’s pension. - 59% of respondents plan to work after retirement. Providing financial and educational campaigns is important as this will ensure the financial sustainability and adequacy of future retirees.