The course of human life has changed significantly, and this has led to a re-evaluation of the concept of retirement. With people living longer and longer – in the case of Malta, men live up to 80 years and women up to 85 years – planning for retirement has become more important and necessary than ever in order to live a decent and quality life after retirement.
Therefore, the way retirement is perceived must fundamentally change – not as an end point, but as a new, exciting and meaningful chapter in life’s journey. Gone are the days when retirement was seen as the end of one’s contribution to society and when people started to cut back on everything they used to do.
Today, people are living longer and healthier lives. Research has shown that a person aged 65 today has similar health, aspirations and hopes to a 50-year-old person in their 80s who still has 11 years left in their career.
Today’s retirees see the rest of their lives as an opportunity for personal growth, social
engagement and a time to pursue hobbies that have been put on hold due to work and family obligations. -family. They also expect to maintain the same quality of life they enjoyed before retirement. It should be recalled that with the reforms of the social security system in 1979, a social contract was introduced guaranteeing a two-thirds pension up to the maximum limit then set as the salary of the Maltese President. Two-thirds or 67% of the pension, which was linked to the President’s salary, provided a very good income.
However, this ratio between the two-thirds guarantee, and the President’s salary was not maintained, mainly because the 1979 pension scheme did not provide for a mechanism that would have allowed the maximum pension income to increase automatically in line with the increase in the President’s salary. Between 1979 and 2006, the maximum pension income only increased by €1,747 – or €64.7 per year.
During the same period, average wages increased many times over, especially the
president’s salary, widening the gap between labour and pension income. At the same time, the value of money has decreased over time due to inflation. It is fair to say that inflation reduces the purchasing power of pensioners.
The pension reforms that have been implemented in Malta over the years have attempted to address this problem by trying to create an adequate income that provides pensioners with the quality of life they desire and then determining how this can be achieved.
