Insurers want mandatory workplace pensions in Budget 2025

Malta’s insurers want the government to implement mandatory workplace pensions that will allow employees to have second-pillar pensions in addition to their state pensions.

The Insurance Association Malta said the government had to take on an ambitious approach in its 2025 budget by implementing mandatory workplace pensions, with a voluntary opt-out, and also introduce 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,” IAM said.

“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.”

IAM presented its proposals during a recent meeting with the finance ministry, on pensions as well as other pressing matters such as drink and drug-driving enforcement, workplace safety, electric vehicles and the challenges the repair industry faced, as well as fire safety in buildings.

IAM said private pensions in Malta 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,” IAM said.

IAM said contributions made are tax-deductible for employers, who could also benefit from a tax credit on the amounts made.

Over the past years, government fiscal incentives had been instrumental in making inroads in the pensions market. Other jurisdictions which 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,” IAM said.