MALTA - Around a dozen pension fund providers in Malta have launched a new trade body to offer the industry a unified voice, as the European Commission urged the island’s government to ensure the sustainability of its pension system.

The Maltese Association of Retirement Scheme Practitioners (MARSP), which was launched today, will also look to fill the void of self-regulator, according to its secretary general Matthew Brincat.

Brincat, a pension lawyer at Ganado & Associates, argued in favour of a strong second pillar for Malta, saying that there was a “serious need” for supplementary pension savings to stand alongside the country’s first pillar.

Payments from the state system currently amount to a maximum of €12,000-13,000 a year, he said.

“We formed this association because we felt the need to self-regulate, to have a central focal point and one voice to speak to the regulator,” he said.

He added that the organisation would also promote best practice across the providers, as well as ensuring all companies were fully aware of local regulations.

He said reforms for a second pillar were being triggered by European Commission intervention, which argues that the country needs a more sustainable retirement system.

Brincat conceded that while current proposals for reform were “quite vague”, the MARSP would welcome proposals for a mandated second-pillar system as an additional source of retirement income.

He added: “We are not saying the first-pillar pension needs to be eradicated, but there is definitely a serious need for it to be supplemented.”

The organisation, consisting of nine trust companies - of which seven are already licensed by the Maltese Financial Services Authority - has also named David Erhardt, pensions director of STM Fidecs in Gibraltar, as its chairman.

The announcement comes as the European Commission released its latest report on the public finances of those within the European monetary union.

The report urged Malta to address this fiscal year’s “excessive” deficit, saying reforms to its pension system were needed.

It said: “Take action to ensure the sustainability of the pension system such as by accelerating the progressive increase in the retirement age and by linking it to life expectancy.”

It also said the government should “encourage” private pension saving and look to discourage early retirement.

A previously released independent report had warned the Maltese government its pension deficit could reach 5.8% of GDP by 2060 if no reforms were implemented.