The Sovereign Group has submitted a new pension scheme to the Malta Financial Services Authority for approval, which would be aimed at customers with less than €100,000 to invest – the threshold for its two existing schemes.

The scheme will be open to Maltese investors and assuming that the Government goes ahead with its stated intention to introduce third pillar “private” pensions in the coming Budget, could be an option for Maltese retirement planning. However, its main aim is to the tap into the British expatriate market.

The group has been here since the 1990s, starting off with Sovereign Trust Malta Ltd, and then opening Sovereign Pensions Services in 2012. It now employs 11 people and moved into larger premises in Valley Road last April.

Operations director Stephen Griffiths, who was here from 2004 to 2008, returned to Malta to set up the pensions unit. He explained that the UK revenue and customs service, HMRC, recognises pension schemes in other jurisdictions, under a regime known as Qualifying Recognised Overseas Pension Schemes or QROPS. This enables a UK pension to be transferred to the QROPS jurisdiction without incurring penalties.

Sovereign opened two successful schemes in Malta, aimed at high net worth individuals, which are recognised as QROPS, with the payment of benefits available under Malta’s numerous double taxation treaties. It is expected that the third scheme will also be submitted for HMRC recognition as a QROPS.

“It will be interesting to see what the Government has in mind for third pillar pensions. At the moment, retirement schemes are regulated under the Special Funds Registration Act, but a new Act is in the pipeline to cover private pensions so all the current schemes would likely need to be re-submitted for MFSA approval under the new legislation,” he said.

“The SFR Act covers both occupational schemes and private pensions at present so although there will be a lot that is similar, there will be some changes.”

There was a consultation process with stakeholders last May. One of the points that emerged was that the SFR Act was more of a trustee-based approach, handled through asset managers. Some retirement pension funds overseas allow for schemes to be member-directed, Mr Griffiths said.

“The proposals include allowing member direction which would give the scheme members the ability to have more control over their pension scheme’s investments into various financial instruments, such as funds, equities, property and so on, provided these comply with the MFSA guidance and restrictions. Of course the trustee remains ultimately responsible for the retirement fund under its administration. The industry is waiting to see what the MFSA stand is on these proposals.”