In 2004 the government established a Pension Reform Commission, which I chaired. Reform was to focus on future generations. Pensioners, and those 55 at over at the time, would be addressed through budget measures. That choice was deliberate. Sustainability could be built for those still in work, while fairness to older citizens had to be handled directly.

Two positive steps were introduced for the over-55s. The cap on income earned while drawing a pension was removed. Retirees could work and earn freely. And the full cost-of-living adjustment began to apply. These measures ensured fairness and encouraged retirees to stay in work.

The reason was stark. In April 2004 a World Bank report warned the system would collapse by 2004. The adequacy of the state pension would sink from 55% average wage replacement to 16%. Life expectancy rose from 61 to 79, stretching a system built for 3-4 years of retirement to 18; in 1979, male longevity was 64. And the demographic base was eroding. With fertility at 1.4, Malta's population was projected to fall below 390,000 by 2050. That is not a pension system. That is wishful thinking.

The reform architecture therefore started with adequacy. How could the collapse in replacement rates be offset? The Commission looked beyond the state pension. A mandatory second pension. A voluntary layer through occupational and personal pensions. A child pension. Incentives for holders of endowment policies maturing at the time to reinvest in pension instruments rather than cash out. And fiscal incentives to support saving.

At the time, the harshest criticism towards the reform was aimed at the proposed mandatory second pension. Employers, unions, and civil society objected. Government, faced with that resistance, stepped back.

In 2008 a new minister set up a task force on the second pension, which I was again asked to chair. We recognised that insisting on a mandatory model would not work. We explored alternatives. One was New Zealand's KiwiSaver. This used automatic enrolment (AE), behavioural nudges, and inertia to build savings. Eighty per cent of those enrolled stayed. More importantly, this included workers in their twenties - the group who could build significant savings through compounding. The strength of AE lies in reversing behavioural heuristics. People often fail to save because those heuristics hold them back. By turning them upside down, AE keeps people in the system and their savings grow steadily.

The 2007 reform introduced a safeguard against the paralysis of 1979-2004, when the system went unreformed while the ground shifted under it. Every five years there had to be a strategic review of adequacy, sustainability, and solidarity. The first was set for 2010. I chaired that review. The terms excluded any proposal linked to a second pension. Reviews in 2015 and 2020, admirably chaired by my successor, sought to open the door indirectly to AE. The 2015 review even published a support paper. The 2020 review completed one, though it was not released.

At the end of the 2020 review I told government that, while I thanked it for its confidence, it was time to appoint new people. I would pursue reform outside government. Together with the GWU and the Malta Chamber of Commerce we issued an AE declaration and a draft bill ahead of the 2022 election.

Now in 2025 the government has issued a White Paper on AE. This is a major positive step forward. But it raises questions that should not be rushed. AE is not a switch to be flicked. If badly designed it will collapse confidence in both AE and the private pension market, still in its infancy. A scandal, or even a misstep, could discredit reforms that have taken decades to build.

I have argued for AE since 2009. I welcome the White Paper. But my reaction is simple: go carefully. The system must be properly designed, phased, and tested. This is too important to fail, and if we blunder, trust once lost will not be easily regained.

In the next pieces I will examine the White Paper in detail - its strengths, its risks, and my recommendations for how AE can work for Malta.