“While the government has, to date, made a number of proposals that will define the way pensions will be organised in the future, we at Bank of Valletta have been closely following developments including the debate that is taking place in Parliament and we strongly feel that now is the time to take stock of the situation - especially since we are approaching the moment when important decisions are taken and new opportunities will become available as the regulatory framework that will govern the market for pension products is formalised.”

This was stated by Tonio Depasquale, chief executive officer of Bank of Valletta during his opening speech at a Business Breakfast hosted by BOV to discuss the Pensions Reform.

Mr Depasquale added, “The Pensions Reform is not only an issue of national importance – it is also a reform that will, undoubtedly, have a significant impact on all sectors of the economy. It is in this context that Bank of Valletta is today debating these developments because as the leading financial services provider operating in the economy, we have been preparing ourselves for the opportunities that will be created by the Pensions Reform.”

“Indeed, we are looking forward to be among the first to offer more new services to our customers that will address the financial planning needs linked to retirement. This is in line with our business credo – your success, our goal – a philosophy built on supportiveness and mutuality whereby we seek to understand our customers’ value to the bank and help them achieve their full potential; a business orientation where the customers’ long term benefit comes first,” Mr Depasquale concluded.

The Business Breakfast, held at Hilton Malta, was addressed by Franco Xuereb, head of BOV’s Bancassurance Office, who gave a comprehensive talk on the government’s pensions reform proposals, and by Stuart Fairbairn, Middlesea Valletta Life (MSV) Pensions Consultant who placed the local pensions reform debate in context with the rest of Europe.

In his speech, Mr Xuereb explained the various changes to the Social Security Act that are currently being discussed in Parliament and the changes that are being proposed to the First Pillar Pension, as well as the government proposals to the introduction of Second and Third Pillar Pension Schemes. Mr Xuereb also went through the fiscal incentives relating to pension schemes that the government had issued in the recently published pre budget document.

During his presentation, Mr Xuereb said that it is important that the existing savings culture is reinforced and that pension schemes are kept simple and easy to understand in order for such schemes to be a success. He also stressed that an educational campaign by all the parties involved is imperative and that BOV is proud to be in the forefront with the organisation of the Business Breakfast.

Looking at the problems of an ageing society, Mr Fairbairn said that the current pensions system would be unsustainable from as early as 2011, when total National Insurance contributions would be insufficient to pay the pensions due. Reform was not only necessary but also urgent and should not be dictated by different political agendas.

He explained how Malta’s current State Pension System was generous in comparison to other countries in Europe, but the public needed to understand what levels of benefits they could realistically expect to receive. In 2003, the average State pension was approximately Lm44 per week, which was only 82 per cent of the national minimum wage.

Pensions in the UK, he said, have been over-complicated and Malta should learn from the UK’s mistakes. Pensions need to be simple so that people can understand them and can work out how much extra they need to save in order to provide for the lifestyle they want when they retire.

Mr Fairbairn explained what employers need to do in order to embrace Pensions Reform. Responsible employers need to keep up to date with the changes in legislation and need to help employees understand what the changes mean to them and what they should be doing about them. They also need to be prepared for mandatory Second Pillar Pensions when (not if) they are introduced. He said MSV and Bank of Valletta were already working hard to help employers with these tasks and would be providing much support over the next few years.