Finance Minister Edward Scicluna this morning refuted claims that the government made a U-turn on the introduction of voluntary second-pillar pensions, saying the measure it would be introducing had been announced in the last Budget.
Addressing a news conference on a tax deduction scheme which is being piloted by the Arts Council, he quoted part of the 2016 Budget speech which made reference to such plan that says:
“As of next year we will be setting up a working group to consider what fiscal benefits may be accorded to employers who undertake private pension schemes for their employees on a voluntary basis.”
When it was pointed out to him that the quote made no direct reference to second-pillar pensions, Prof Scicluna replied:
“What’s in a name?
“When you say introducing second-pillar pensions it means on a mandatory basis, and even though it was not mentioned by name, there is a clear reference to such a kind of pension. If an animal has four legs and a trunk it is an elephant.” However, he reiterated that the government’s plan was for voluntary and not mandatory pension schemes."
The controversy erupted yesterday afternoon when the finance Minister said that plans for a voluntary second-pillar pension scheme were being drawn up by the government which would soon appoint a task force to suggest fiscal incentives for such a purpose.
This announcement was made during a special joint session of the Malta Council for Economic and Social Development and the Malta EU Action Steering Committee.
Prof. Scicluna presented Malta’s plans to meet the country specific recommendations issued by the European Commission, as part of the national reform programme.
PN'S REACTION
Reacting to Prof Scicluna’s remarks, PN deputy leader Mario De Marco pointed out that his party had never called for mandatory second-pillar pensions, but for a debate on the effects of such measure.
“This is a commendable move by the government, as it is no longer considering this issue as a taboo. Good sense has prevailed," he said.
PL STATEMENT
In a statement, the Labour Party said the second pillar pension the Nationalist Party wanted would mean that workers would have to pay a compulsory contribution.
This would essentially be a new tax on every worker and employer.
On the contrary, following the interest in voluntary third pillar pensions, the government now wanted to widen the incentive scheme.
Through the third pillar pension, every person who invested up to €,1000 in a private pension would be given €150 back in tax credit.
Till now, a pension contribution could only be made by the individual concerned or his or her partner. The government would now be exploring the possibility of having an employer’s contribution also benefitting from a fiscal incentive.
This meant that while the PN wanted every worker to pay a contribution, the government wanted the choice to remain voluntary. Those who decided to take up the option would be assisted by the government through this incentive, which would mean that for every €1 invested, the government would give a 15c incentive.