With an ageing population and one of the lowest birth rates in Europe, Malta faces increasing pressure to develop sustainable retirement solutions. Although the government introduced incentives for private pensions back in 2017, the uptake has remained modest, indicating a need for further action to encourage retirement savings.

Historically, Malta’s pension system has relied solely on the state pension scheme, with occupational and private pensions playing no role at all. Recognising the importance of diversifying retirement income sources, the Maltese government has gradually introduced legislation to support and regulate these types of pension schemes.

To drive adoption, the government introduced tax incentives in 2017 for both personal pension savings and voluntary occupational schemes.

The Budget 2025 announcement marked a significant milestone: the government confirmed plans to introduce a form of auto-enrolment for workplace pensions in Malta. While specific details are still forthcoming, this move represents a decisive step towards broadening pension coverage.

Under this proposal, all employers will be required to offer a workplace pension scheme for their employees, although contributions will remain voluntary.

To lead this change, the government has committed to contribute up to €100 per month per public sector employee who chooses to participate in a scheme.

‘An important shift’

Cristina Cassar Difesa, managing director of Sovereign Pension Services Limited in Malta, welcomed the government’s initiative, noting its potential to reshape Malta’s pension landscape.

“It is great to see the government taking proactive steps to encourage additional pension saving in Malta. Auto-enrolment has proven to be highly successful in the UK, and similar frameworks have been recently introduced in Gibraltar and Guernsey.”

Sovereign Pension Services, which operates in Gibraltar and Guernsey as well as in Malta, has played a leading role in delivering compliant, efficient and affordable occupational pension plans for employers and employees in these jurisdictions.

In Guernsey, Sovereign was selected by the States of Guernsey, the local government authority, to manage Your Island Pension, the default occupational pension plan available to Guernsey employers.

Cassar Difesa said: “Overwhelming feedback from colleagues in our sister branches highlights that an occupational scheme is a highly effective tool for clients in attracting and retaining top talent, with long-term benefits that continue to deliver value.”

She continued: “Sovereign Pension Services looks forward to applying its experience and expertise to the Maltese market, offering tailored solutions that meet the unique needs of local employers and employees as the return on investment in employee satisfaction and loyalty is well worth it.”

Malta’s adoption of auto-enrolment represents an important shift towards a more robust and diversified pension system, with the potential to significantly increase retirement savings across the country, Cassar Difesa noted.

By building on the successful frameworks of other jurisdictions and tailoring them to Malta’s unique context, the government’s approach promises to create a stronger financial future for the next generation of Maltese retirees, she concluded.

Sovereign’s retirement planning teams provide comprehensive support, handling everything from initial design to finalimplementation.

For more information, visit maltapensions@sovereigngroup.com.