Unlike many jurisdictions, Maltese employers are not obliged
to provide a private workplace pension to their employees.
The retirement age is currently set at 65 years, with the
maximum state pension in Malta at approximately €229.20
($259) per week. This figure is fixed irrespective of how long
an individual has worked or how much they have earned during
Today, with an aging population and people living longer
lives, this creates challenges for states seeking to cope with
maintaining pension funds for the current workforce. In fact, a
few years back, Malta's government launched a scheme to try and
incentivise individuals to continue to work post retirement age
by increasing the pension. However, the weekly increase was so
minor, it was questionable whether it served its purpose.
In addition, in recent years there has been a drive by
Maltese legislators to incentivise employers to provide pension
plans to their employees. Whereas private workplace pension
plans are increasing, such schemes are not considered to be the
On September 12 2017, the Voluntary Occupational Pension
Scheme Rules were published by Subsidiary Legislation 123.175
(VOPS), which was applied retrospectively and came into force
January 1 2017. VOPS seeks to incentivise employers to make
contributions to a qualifying pension plan on behalf of
employees, by providing a tax deduction to the employer and tax
credits to both the employer and employee.
In addition to the tax deduction and available tax credits,
VOPS notes that any contributions paid by the employer, on
behalf of the employee, does not constitute a taxable fringe
benefit in the hands of the employee. This further adds a
fiscal benefit for employees, and a way for employers to create
attractive remuneration packages for their employees.
Whereas VOPS was published in 2017, almost two years later
its application is relatively new. In fact, last October, and
presumably with a view to promoting the application of VOPS, in
the financial budget speech of 2019, the Minister for Finance
announced that VOPS will be amended to provide greater benefit
to both employers and employees utilising such schemes.
Currently, no amendments have been made to VOPS and neither
were the amendments referred to in Bill 65 in 2018 on the
Budget Measures Implementation Act. It is expected that these
amendments will be published within the coming months.
As the retirement age increases, available state pension
funds are decreasing. Whereas current private workplace
pensions are not mandatory, the publication of VOPS is a good
starting point for employers to introduce such schemes into
their workplace, with a view to supplementing state pensions in
the years to come.
Dr. Rebecca Diacono (email@example.com)
Fenech & Fenech Advocates Malta