Pensioners will make up one-third of the population by 2070

People over the current pensionable age of 65 will make up one-third (33.6%) of Malta’s population by 2070, a study has found.

This marks an increase from 19.3% in 2022, while the working-age population is set to shrink from 63% to 51% of the total population.

These shifts will double the old-age dependency ratio from 30% to 65%, meaning that fewer workers will be supporting each pensioner, according to the latest review of Malta’s pension system by the pension strategy group, a government appointed technical body.

Under Malta’s pay-as-you-go system, pension benefits are primarily funded by the contributions of those currently in the workforce.

Whilst the group concluded that Malta’s pension system is fundamentally sound, it warned that it is increasingly exposed to demographic and structural pressures.

Fiscal projections indicate that, without reforms, pension expenditure as a share of gross domestic product (GDP) will continue to rise gradually, placing additional strain on public finances.

At the same time, inequities persist due to the prevalence of non-pensionable income, irregular contribution histories, and gender gaps in salary earnings.

Over the past decade, total contributors to the social security system rose from 151,000 in 2008 to 283,000 in 2023.

The report cites this increase as clear evidence of vibrant employment growth, better compliance, and the positive contribution of inward migration.

Between 2013 and 2024, the foreign-born population increased threefold, rising from 43,331 to 173,781.

The report says that whilst Maltese nationals remain the primary contributors to social security, the dramatic rise in non-Maltese contributors has played an increasingly vital role in supporting the system’s sustainability.

Population projections indicate a rise in Malta’s total population from 527,806 in 2022 to approximately 810,981 by 2070 the report says, while net migration inflows are predicted to decline from 11,456 in 2022 to 3,992 in 2070.

The report speaks of the importance of ensuring policies that integrate and retain foreign workers, while balancing efforts to support and grow the participation of Maltese nationals in the system.

Migration policy and labour participation remain integral to pension sustainability, as foreign workers constitute a growing share of contributors and play a crucial role in maintaining the system’s balance.

It says that any major pension reforms should be communicated at least fifteen years before implementation, to allow adequate adjustment by future beneficiaries.