Several incentives have been rolled out in a bid to encourage both employers and employees to set aside an occupational pension.

This refers to small sums of money being put into a tax-free expense account, with money contributed by the employer and employee, which account is temporarily held by the employer - until pensionable age. It is somewhat similar to a private pension, but involves cooperation between employer and employee.

Because the money set aside by the employer is placed into an expense account, it is non taxable.

Finance Minister Edward Scicluna addressed a press conference to describe the incentives, and cautioned that Malta must be responsible and save money while the economy is performing well. Compared with the number of people entering the labour market, the group of retired persons is growing. In addition, relatively low labour force participation, in particular among women, can put a strain on public finances such as state pensions and government revenue from income tax.

In a bid to combat this, Government has rolled out this scheme, which differs from a second pillar pension due to the fact that it is strictly voluntary.

Employer's can benefit through a tax credit on profits earned, calculated as a maximum of €150 for every €1,000 contributed.

For employees, they will also be given a €150 tax credit on their wages, which would not be considered a fringe benefit.

For self-employed persons, should they take up a pension outside of work, with their personal income, this would be considered a third pillar, private pension. If however, they save company money for an occupational pension, the same incentives described above would apply.

Should an employee who has taken up the scheme change job, and their new employer does not want to set up an occupational pension, than they have the option of transferring the account into their name and turning it into a third pillar, private pension scheme.

Asked about employees reaction to this, Scicluna said much resistance has been met in the past. He is hopeful that this scheme will slowly gain traction especially in view of the more forward looking , modern companies that have set up shop in Malta.