Pensions report warns one in three people will be over 65 by 2070

Minister for Social Policy and Children’s Rights Michael Falzon has tabled the 2025 Report of the Pensions Strategy Group, as part of Malta’s five-yearly statutory review of the pension system focusing on adequacy, sustainability and social solidarity.

The report, led by Permanent Secretary Mark Musu, notes that the review is taking place amid rapid demographic change. Fertility has fallen to 1.06, while life expectancy continues to rise. By 2070, people aged 65 and over are expected to account for 33.6% of the population, and the Old Age Dependency Ratio – the ratio of pensioners to workers – is projected to double within the next 45 years.

These trends contrast with positive developments in the labour market, including record employment rates, higher female participation and an increase in foreign workers, it said.

The report states that recent pension reforms have improved adequacy by around five percentage points. These reforms include changes to the annual pension increase mechanism, higher pensionable income limits – including for those born before 1962 – stronger contribution credits and improvements to minimum pensions.

An incentive allowing individuals to receive an additional pension increase of up to 29% if they continue working and defer drawing their pension has attracted almost 7,900 people since 2016, it said. As a result, long-term projections show improved sustainability, with the point at which pension spending exceeds income shifting from 2051 to 2054, it said.

While no increase in the retirement age or social security contribution rate is being considered, the Pensions Strategy Group identifies several structural issues for further analysis. These include the role of migration, wage composition and job quality, the impact of child-rearing, participation in private pensions, alignment of the Guaranteed Minimum Pension Level and fertility policies.

The public is invited to submit feedback on 14 questions during a consultation period running from Monday 5 January to Friday 3 April 2026, which will inform the Group’s recommendations on the future direction of Malta’s pension system.