The Insurance Association Malta is calling on the government to take on an ambitious approach its 2025 budget by implementing mandatory workplace pensions with a voluntary opt-out, while introducing a transitory framework for employers to contribute towards their employees pensions.
With people living longer and not always managing to set aside sufficient money for their future, a mandatory workplace pension will help to smoothen the transition as they retire to maintain a good standard of living.
“Malta should adopt the British model and introduce mandatory workplace pensions with a voluntary opt-out. Experience has shown that for this to succeed, employers should also pool in and contribute to entice employees to take part,” the Association said.
During a recent meeting with the Finance Ministry, IAM presented its proposals on pensions and other pressing matters such drink and drug-driving enforcement, workplace safety, electric vehicles and the challenges the repair industry faced, as well as fire safety in buildings.
The Association raised the subject of private pensions and said these were still relatively under-developed and although the foundations had been laid, workplace pensions and private third pillar pensions still had a long way to go.
“As the government works on finalising its budget for 2025, we urge it to consider our proposals and present a more ambitious and courageous approach by introducing mandatory workplace pensions that will also encourage employers to contribute. In this way employees will think twice before opting out,” it proposed.
IAM said contributions made are tax deductible for employers, and they could also benefit from a tax credit on the amounts made.
The Association praised the government’s fiscal incentives introduced over the past few years and said these had been instrumental in making inroads in the pensions market. For this to be sustained, these had to complemented by further initiatives to attract more individuals to start saving for retirement at an earlier age.
IAM added that other jurisdictions which had introduced this type of measure had experienced an improved take-up of pension savings.
“We augur that the government, social partners and unions will recognise the benefits such a system will yield to ensure our future pensioners can sustain a decent quality of life.”