Budget 2025 next week is expected to see a major drive towards third-pillar pensions, with a new scheme spanning both the government and the private sector.
Employers and their workers will, however, still have the choice to opt out of the private pensions scheme.
The measure, which will apply to a particular age cohort, will also be spread to an estimated 50,000 public sector workers. The figure of the government contribution is not yet known.
All private employers will have the choice to compete on the contributions to make to their workers’ pension plan.
Times of Malta is informed that intensive discussions between financial and insurance practitioners about the way forward took place in recent weeks.
“We believe this will have a cascade effect on private employers. It will be a bold move,” a source in the industry told Times of Malta.
“Our labour market is strong and we are optimistic this measure will pay off,” the source said.
Our labour market is strong and we are optimistic this measure will pay off
The measure is intended to create competition among employers over who could offer the most attractive pension contribution condition to employees.
Currently, an annual tax credit is available to individuals who make contributions to a personal retirement scheme of 25 per cent of the aggregate amount of the qualifying contributions made during a year, up to a maximum of €750.
Rules were also amended in recent years to further enhance the fiscal measures already in place to incentivise the occupational pension system in Malta among the private sector. An annual tax credit is available to employers, amounting to the lower of 25 per cent of the amount of contributions paid and €750 for each employee in respect of whom the contributions are paid.
Malta’s anticipated pension crisis has been put on hold as the influx of workers provides a cushion to pension contributions.
However, especially amid rising inflation, disposable income for those in pension age is constantly being eaten away.
The Insurance Association Malta recently urged the government to make workplace pensions mandatory in the budget while introducing a transitory framework for employers to contribute towards their employees’ pensions.