The pension system in Malta : how can we solve the problem by amending the national insurance brackets?

Abstract

The situation with regards to the pension system in Malta has long been a major issue for successive governments. Although measures have already been taken and are slowly being adopted, the system as it stands, is still unsustainable and a radical change is needed in order to avoid serious economic and social repercussions. Various international institutions have also flagged out this problem in successive reports regarding the need to tackle this issue for a better future for Malta’s next generations. In the thesis, a brief comment will be made with regard to the current scenario and the old model, whereby everyone pays a flat rate of 10% National Insurance (NI). The suggestion is that the present system will be changed. This would entail the introduction of having the NI similar to the current tax bracket system whereby people will pay NI according to their gross annual income. The model will investigate the possibility of reducing NI rates to those who are at risk of poverty due to their very low income – so that they will have more disposable income and still earn a decent pension. The NI of other brackets will also be investigated and reviewed accordingly.