MALTA - The Maltese government will implement second- and third-pillar pension schemes by 2011, IPE has learnt.

John Dalli, the country's social policy minister has held this post in the new cabinet since the right-wing Nationalist Party won the Malta general election in February but has committed to implementing all pension reform within this legislature.

"In the context of the present economic scenario, I believe that we should be in a position to conclude the consultation process with all constituted parties and implement the second tier of the pension system within three years," said Dalli.

Pension reform started two years ago when the government legislated for the gradual increase of the retirement age - up to 65 years - and the maximum wage from the State pension.

Under the amended Social Security Act, Dalli's Ministry is obliged to review reform recommendations by the end of 2010.

However, Dalli has stated in Parliament he plans to conclude the reforms within this legislature.

So far, legislation allows for the introduction of compulsory occupational pensions and voluntary private pension packages but Dalli still remains tight-lipped about his plans for tax incentives.

Two years ago, the government said the economic situation was not conducive to the introduction of mandatory contributions from workers and employers for second pillar pensions.

However, the change in government is now acting on recommendations made in a report from the International Monetary Fund published last September arguing Malta should not delay plans for the introduction of second pillar pensions, as such a move would see the Republic rendered unable to sustain a heavily-burdened social security system. (See earlier IPE story: Malta dismisses warning on pension reforms)

Further information about the development of Maltese pensions will be published next month in the June edition of IPE.