Investing in a private pension now has the added benefit of saving up to €300 in tax per year, under two new schemes launched yesterday by local life insurance company MSV Life.

These third-pillar pensions are the first to be registered with the Inland Revenue Department, following the private pensions incentives rolled out earlier this year by the Finance Ministry. These include a 15 per cent tax rebate of the amount invested each year, up to a maximum of €300.

Speaking at the launch of these products, Finance Minister Edward Scicluna yesterday warned that the State pension alone would not be enough for young people wanting to maintain a high standard of living during retirement. For this reason they had to supplement their State pension with a private one of their choice, he said.

Government’s policy of making work pay will not succeed if a mandatory second pillar is introduced

The Finance Minister reiterated the government’s position against mandatory second pillar pensions saying it would put onerous burdens on employers at a time when the government wanted to increase participation in the labour force.

“Government’s policy of making work pay will not succeed if a mandatory second pillar is introduced today,” Prof. Scicluna said.

Nevertheless, the ministry wanted to explore what kind of incentives would be required to encourage voluntary workplace pensions. For this reason, a task force would be appointed in the coming days, the Finance Minister said.

Prof. Scicluna was reacting to a call made by MSV Life chief executive David Curmi who complained that there were no fiscal incentives for workplace pensions.

The schemes launched yesterday require a minimum monthly contribution of €40, and are eligible for those aged 18 years and over. Under the current legislation up to 30 per cent of the savings can be redeemed as a lump sum, when one reaches the age of 50 up to 75 years.