Social policy minister Michael Falzon urged people to invest in private pension plans on Wednesday, warning that a demographic shift to an ageing population could impact the public pension system. 

"With the current (demographic) rates, we need to talk about private pension schemes. Some people may say we are admitting defeat and that we won't be able to provide for our people in 20 years," Falzon said on Wednesday. 

"But it's not a question of putting up the white flag. It's a question of facing realities, which do not go away if your head is in the sand," he said.

Falzon was speaking at a conference on financial literacy. On the sidelines of the event, Falzon, whose ministerial portfolio includes pensions, was asked to clarify his comments. 

"If you have a certain number of people working, pensions are sustainable," he said.

But there is no guarantee of what will happen in the future, and encouraging people to think about their future is wise, he said. 

Falzon said Malta's demographic reality, like most of the Western world, was that people were living longer and had fewer children.  

So, is the pension system as we know it at risk?

Falzon said he was speaking about 20 or 30 years in the future.

"I didn't say that pensions are not sustainable, at least in today's economic circumstances, but for the future, I am not a prophet to predict the future. 

"That someone thinks about their future is positive and definitely needs to happen more, given today's demographic realities,” he said.

Findings on the state of Malta's financial literacy were presented during the  conference organised by Ġemma -  a government platform created to teach people financial skills, like debt management and retirement planning.

The study conducted by Marika Fsadni interviewed 1,005 people between the ages of 18 and 79.

One in 10 said they did not take any initiative to track their household spending. That figure was significantly lower than the third who reported not tracking their money in 2018, Fsadni said. 

People saving less

The study showed that more people were saving money in 2018 than last year. 

In 2023, 17 per cent of the survey's respondents said they had not saved money in the last 12 months. 

Six years ago, only 7 per cent said they had not saved anything in the year. 

One out of every five survey respondents said a private pension was part of their retirement plans. That figure rose to a third when only considering people in their 40s. 

While 75 per cent of people said that government pension was how they planned to fund their retirement, that figure dropped down to just over half for those aged between 20 and 29.