The perceptions of the Maltese young generation of investing in retirement plans early to support future pensions

Abstract

This research focused on the perception of the Maltese young generation towards retirement, more specifically, whether the targeted sample considers starting saving from an early stage through investing in a Personal Pension Plan. The design of this research was based mainly on qualitative data. Primary data was obtained through a questionnaire addressed to Maltese residents whose age ranges between 18 years and 35 years. In addition, an interview was conducted with a local bank that recently introduced its Third Pillar Pension, and such an interview brought out professional information and advice on such matter. Secondary data was used to gather existing information regarding pensions in Malta. Researched literature outlined that the government pension is not adequate for Maltese residents to maintain their current lifestyle even during retirement. The collected data for this specific study obtained this same result. Although most of the younger generation think about retirement, very few started to plan or save for it. This research observed that the main reason is that the younger generation believes that it is too early. However, other factors, including long-term commitments, such as home loans, are also why youngsters do not start to invest early. The targeted sample believe that a Personal Pension Plan is worth investing in. However, they still prefer to use alternative investments as their way of saving for the future. Following certain reforms, the number of persons who invested in a Personal Pension Plan had increased significantly. Therefore, it is suggested that the authorities must introduce further benefits to encourage people to start investing independently. This research also revealed that several persons from the sample taken have shown a lack of knowledge on such matter. Thus, there should be more awareness so that the rising generation can gain more understanding. Theory shows that the earlier the savings, the better the investments. In other words, the key for one to have adequate financials for retirement is starting to save early. The duration of retirement is unknown; it is therefore vital that one should be financially well prepared. Although there are alternative investments that one may invest in to save for retirement, this study highlights that a Personal Pension Plan is the best way of saving in the most tax-efficient manner.