Four in five Maltese pensioner households can cover key living costs through their pension – study

Almost four out of five Maltese pensioner households are able to cover their essential living expenses using their pension income alone, according to new research examining the financial position of current and future retirees.

The findings emerge from a supplementary paper prepared for the 2025 Pension Strategy Group report by Glenn Abela, Senior Research Economist at the Central Bank of Malta, using data from the Household Finance and Consumption Survey (HFCS). The paper analyses household income, expenditure and wealth among pensioners and those approaching retirement.

The research found that 79 per cent of households headed by someone aged 65 or over could cover key expenditure items – including food, utilities, rent and interest payments – through their pension income in 2021. This marked an improvement from 69 per cent in 2017. Among households made up solely of pensioners with no labour income, the figure rose to more than 84 per cent.

Despite pension income replacing employment earnings after retirement, spending on these essential items remained broadly stable throughout the household life cycle. The study found that the median pensioner household spends just over half of its disposable income on these basic expenses.

However, the paper also identifies a vulnerable minority. Around 11 per cent of pensioner households spend more on these key expenses than their disposable income, suggesting they must either draw down savings or rely on other income sources. In some cases, this occurs despite households having relatively low levels of accumulated wealth.

The study also notes that pension income has increased significantly in recent years. Between the 2017 and 2021 survey waves, the median monthly gross pension received by households headed by someone aged 65 or over rose from €737 to €899, while median disposable household income for this age group increased by 13.2 per cent.

While the public pension remains the dominant source of retirement income, only 15.4 per cent of pensioners reported receiving income from private or occupational pension schemes. Among working-age adults, just 6.9 per cent said they were contributing to a voluntary pension plan, indicating relatively limited uptake of supplementary retirement savings despite growing concerns about long-term pension sustainability.

The research also highlights the role of wealth in retirement. Median net household wealth increased from just over €235,000 in 2017 to €269,000 in 2021, driven largely by rising property values. However, financial assets declined for many age groups, meaning that a greater share of household wealth is now tied up in property rather than liquid savings.

According to the paper, half of retired households held enough financial assets in 2021 to cover around two and a half years of essential expenditure, providing a buffer against unexpected costs.

Mr Abela argues that policymakers should pay particular attention to pensioners who have both low incomes and limited assets, while encouraging greater uptake of private pensions and improving financial literacy among younger workers to strengthen retirement preparedness.

The paper also suggests that more targeted support could be designed for vulnerable elderly households, alongside measures to help asset-rich but income-poor retirees unlock housing wealth where appropriate.