The Insurance Association Malta (IAM) welcomed the Government's workplace pension scheme for public sector employees but urged more ambitious action, calling for a mandatory plan with a voluntary opt-out.

IAM described the initiative, which includes the Government matching contributions made by public sector workers up to €100 per month, as a bold step that highlights its commitment to set an example. However, the measure does not require private sector employers to match contributions made by their employees.

While the budget obliges private sector employers to provide a workplace pension scheme enabling employees to contribute a portion of their monthly wage, employer contributions remain voluntary.

The Association also stressed the importance of a transitional framework for employers to support contributions to these schemes.

Nonetheless, the Association pointed out ambiguities regarding whether these workplace pensions would apply to current or only new employees and if they would be universally applicable or segmented by factors such as age.

While Finance Minister Clyde Caruana indicated that employers would not be obligated to match employee contributions, IAM highlighted that he encouraged participation and voluntary top-ups from employers. The Association reiterated that Malta had lost two decades with minimal progress on pension reforms and urged authorities to implement auto-enrolment workplace pensions without delay, supported by a voluntary opt-out.

IAM also stressed that the absence of detailed plans in the budget speech necessitates consultation with relevant stakeholders to ensure a smooth roll-out. The Association expressed its readiness to contribute insights and proposals during these discussions.

Emphasising the critical role of financial literacy, IAM warned that a lack of awareness could lead to employees opting out of beneficial pension plans.

It highlighted that understanding the advantages and drawbacks of pension products is essential for making informed choices.

Concluding its statement, IAM underlined that the country must move beyond dependence on state pensions as the sole safety net. It stated that proactive contributions are necessary to secure a prosperous future for retirees and stressed that relying solely on state-funded welfare, supported by taxpayer money, was unsustainable.