The pension is not enough to live off, President of the Malta Chamber of SMEs Paul Abela told WhosWho.mt, pushing forward a proposal for a new business investment scheme.

This scheme had been outlined in the Chamber's proposals to the political parties earlier in the election campaign.

"There are around €27 billion in bank deposits. Till today, the public who invest do so mainly either in government or private sector bonds, including unsecured ones. The coupon rate is what is most important."

"We are saying that, with serious regulation, people can enter equity sharing."

To mobilise the funds kept in deposits, the Chamber of SMEs is calling on the government to introduce robust fiscal incentives designed to encourage the general public to shift their focus from passive saving, to active investment in local enterprises.

The Chamber of SMEs proposal would see members of the public be able to grant one or more micro loans, up to a maximum of €50,000 per year and up to a total of €250,000 across all loans, with a minimum interest between 2.25 per cent and 4.50 per cent.

The scheme would be open to SMEs of good standing which are established and operational in Malta, and they would be able to borrow up to €250,000 (combined).

The Chamber is proposing certain government incentives for this proposal, that the lender will benefit from an annual tax credit of 4% for the first three years and then 2.5% for the remaining years (Up to 8 years); and that the lender can benefit from a one-off tax credit of 50% on the definitively lost principal, for example in the event of bankruptcy, which would increase to 60% if the borrower is a business that focuses its activity on digital or green initiatives.

"Today there are large Maltese companies that still have public shareholding. Such as when a PN government had issued shares in Bank of Valletta. We did not continue on with that culture. If there are serious private companies which would say, for example, that they would issue 20 per cent of their shares to the public, then the people instead of participating with interest, would participate even in the profits, always with serious regulations."

Asked whether the Chamber's proposal is riskier than what currently exists through the prospects market for instance, he said that it will be riskier "because you are taking shares in a business. But if you believe in that company and want to participate in the profits... At the beginning it will always be hard, and it depends on the person."

"If we are talking about a middle-aged person, today they invest in property," he said, noting that apartment rentals bring income and when in the future one comes to retire the pension "would not be enough."

"People need to realise that you cannot live off of the pension in Malta. I am a pensioner, and I receive a pension of €1,300 a month. The youths today need to start thinking ahead."

He believes this proposal by the SME Chamber could be a scheme in which people could participate.

Asked whether there should be any safeguards given that it would be riskier, he said there should be.

He said that an authority or the Stock Exchange itself would need to certify that it is a serious company and that the owners of said company offering the equity would be serious businesspeople.

"The risk would be that you either succeed with them, or lose with them. But obviously you wouldn't throw in all your savings," he said, adding that there would be a capping.

If the funds in deposits are put to use, he said, then the country will benefit.