Malta has been urged to place greater emphasis on third-pillar pension saving rather than a compulsory or semi-compulsory system of occupational provision.

The Malta Employers’ Association (MEA) suggested the government should introduce incentives to encourage workers to save into third-pillar provision, or nudge employees into action.

It reiterated its long-standing opposition to any element of compulsory pension saving.

The government-backed Pensions Strategy Group (PSG) previously suggested this should be the next step if current proposals to encourage saving into individual savings accounts failed to boost participation.

In its position paper, the MEA argued that the government needed to do more to ensure Maltese workers understood that the first pillar would only ever act as a safeguard, unable to guarantee the same purchasing power enjoyed while in employment.

“The Association reacts positively to the fact that, rather than introducing a second pillar, the [PSG] is recommending incentives for more persons to invest in third-pillar products,” it said. 

The MEA’s paper implied that pensioner poverty was due to “individual choices” made by pensioners, driving them towards poverty.

“The MEA has been claiming that a culture of dependency is detrimental to our society, and that people cannot expect the state to provide for all their needs through handouts,” it said.

“The general public must be made to understand this point through educational campaigns.”

Under the current Supporting Retirement Scheme proposed by government, workers will be offered a tax rebate on annual contributions up to €1,000, which it was hoped would offer an average replacement rate of 9% after 40 years of contribution.

In the event that the system fails to boost participation, the PSG recommends the consideration of a mandatory opt-in, voluntary opt-out scheme, with administration and other elements overseen by employers.