The occupational pension scheme introduced recently could lead to a mass take up of savings schemes for retirement and reduce the burden on government spending and taxation for social benefits, the Malta Association of Retirement Scheme Practitioners (MARSP) said.
“However, with a booming economy, MARSP feels that Malta can probably afford greater tax incentives (at least double the existing ones) in coming years to re-energise the initiative,” it said.
“Indeed the small amounts could be seen as just paying lip service, today, to the problem that has to be addressed while being part of the EU. A token effort will not have the important effects that healthy pension entitlement can have for a country now, and in the future. This desirable result is not just fiscal, but also is represented in earlier retirement, improved personal health and stronger family finances.”
The incentives add up for the employer, at €2,000 employer tax deduction per employee plus a €150 tax credit, it noted.
A token effort will not have the important effects that healthy pension entitlement can have for a country now, and in the future
“This could make pensions a must for all sizes of Maltese companies, especially where cash flow is tight or there is a desire to retain quality staff through such an incentive. MARSP therefore welcomes this initiative and hopes that the government, itself, as well as the pensions industry will do more to promote the benefits to the Maltese population and employers. If this is a serious attempt to alter the future savings culture in the Maltese islands, the government needs to release a public announcement, at the very least to support its own legislation.”
It also pointed out that for individuals, the €150 tax credit was equivalent to the maximum of 15% of their own contributions from their pay– i.e. €1,000.
“As this credit is given in the tax year of contribution, people can expect a return on their investment of 15% through this relief after the completion of the tax return in June of the following year.”