Earlier this week Parliament approved, in committee stage, an amendment to increase the retirement age from 61 to 65.

This will be done in stages, in the sense that people who are the closest to their retirement will not have to work an extra four years. In fact, for all those born before 31 December 1951, retirement age will still be 61, but for the rest of the working population the retirement age is to increase in stages.

The retirement age for those born between 1952 and 1955 will be 62, for those born between 1956 and 1958 it will be 63, for those born between 1959 and 1961 it will be 64. For those born as from 1 January 1962, the retirement age will be 65.

This was only the second reading of the bill, but the third reading only requires Parliament to cast its final vote on the law as amended in the second reading. This basically means that the law has been passed.

Keeping with the stand it has taken all through the public consultation process and more recently in Parliament, the opposition voted against the amendment.

The Malta Labour Party has insisted that it is still too early to deal with such an issue, claiming that there are other priorities that need to be seen to. It came up with its own plan – which said that the matter should be up for discussion after the coming election – but the government felt that the measures to be taken needed to be taken now, and it carried on with its agenda.

It is a known fact that our lifestyle has changed over the years. People are living longer than they used to in the past, and therefore the number of people of pensionable age would – in the years to come – have grown too much for the pensions system, as it is today, to remain sustainable.

The situation will get “worse” as the years go by, in the sense that in the future there will be fewer workers to sustain the pensions scheme through their national insurance contributions, and there was a risk that the system would have collapsed unless matters were taken in hand.

It is with this in mind that the government embarked on its plan to review the pensions system in Malta. By raising the retirement age gradually to 65, the government has ensured that there will be more people still on the employment books and fewer receiving their pension, although we will know whether the system would be working when we come to that bridge.

But the issue does not stop there.

Another problem that has been on the cards for quite a while is the fact that many pensioners today believe that their way of living has been negatively affected because the pension is not enough to see to their everyday needs.

Each year, after the budget, there is the usual complaint that the cost of living adjustment given to pensioners is only two-thirds of that given to workers. It is however unlikely that the system is changed in the near future, as it is already being stretched to the limit.

What many younger workers are doing today is taking up a private pension, putting in a part of their salaries into a so-called fund to find a lump sum of money once they finish their working life, to add to their pension.

It is believed that the government should encourage more people to take this initiative. One way of doing it could be that the money invested in such private pension schemes by individuals are not taxed. In this way, more people would be attracted to the idea of investing in their future, and thus be able to lead a more comfortable life once they reach retirement age.