It is very likely that during your life you will experience many changes at different stages that will impact your financial well-being. You will journey from a student to employment to, possibly, getting married and bringing up a family, and eventually to retirement. These different life changes are referred to as life events or life cycle events.
Along this journey there are times where you will invest – in your education, in a house, in your children; you will consume – buy your first car, go travelling; and you will save – for many reasons ranging from wanting to further your studies overseas to building a retirement nest egg.
Of these cycles, one is of significant importance: saving and / or investing for our future especially for our retirement. Have you ever asked:
• How much pension will I be entitled to?
• Is the state pension sufficient to cover my future expenditure and to meet the quality of life I expect?
• Have I ever considered boosting my pension with a retirement savings nest egg?
Research in Malta (limited as it currently is but which will expand through further research) and overseas has shown that there is a serious lack of knowledge about retirement. In part this is because we, as human beings tend to give importance to short term goals and for go the long term ones, which consequences can be felt at a later stage – at times when it is too late. Understanding retirement does not solely refer to understanding the importance of our day-to-day savings and / or investments but includes seeking information about retirement financial plans and risks involved, understanding that we ought to take decisions, the consequences of postponing important decisions, repercussions of purchasing a product based on misleading advice and much more.
Furthermore, understanding the importance of saving and planning for retirement alone, however, does not suffice. Such a clear vision shall guide us to analyse all alternatives, make clear decisions and take actions in making the most of our savings / investment for an ultimate financial reward at retirement. Unfortunately, hasty, imprudent decisions may result in losing part or most of our savings and / or investments – with significant consequences on our quality of life particularly when we are close to retirement.
The Government is recognisant of the fact that while various providers are providing different retirement and financial plans, unfortunately some plans have been set up upon their own initiative and there has not been a coordinated approach. Understanding the limitations, in 2016, the Government launched a consultation process on the Draft National Strategy on Retirement Income and Financial Literacy. Following the consultation process, on the 25th of January 2017, the Government launched the Strategy for Retirement and Financial Capability.
For the strategy to be a success, people had to be engaged and aligned. The so-called Retirement and Financial Capability Group is in fact “coordinating and working with stakeholders to implement the actions presented in the Strategy”. The group is responsible of:
o using educational means to promote knowledge about retirement
o building and reinforcing retirement and financial capability across the Maltese Society.
o working hand in hand with all those involved, including active participation of retirees to come up with the best possible solutions.
The Retirement and Financial Capability Group will not in any way hinder or try to replace the excellent work that is being carried out by different private and government stakeholders. Instead, the Group will seek to secure greater networking and synergy across all areas and together with stakeholders initiate activity to address the weaknesses in the strategy.
Financial capability across the Maltese society should not just be a government responsibility but a societal obligation for the benefit of society at large. The strategy can be put into practice if there will be a combination of real efforts from all key actors: individuals, families, local communities, financial services providers, employers, labour organisations, businesses, NGOs. and more key actors. Indeed, all those involved will benefit from a fruitful strategy; a more knowledgeable society with smart positive attitudes leading to success.
Additionally, such an approach is more likely to result in a collaborative partnership that allows confidence to build as the parties work together, explore emerging trends, generate new ideas, and achieve better understanding of the challenges and issues faced by one another.