AE is the right decision. I have argued for it for many years, both in my official roles on pension reform bodies and outside them. Malta needs a second pillar that helps people build additional retirement income in a simple and structured way. Doing nothing was never an option. But getting the principle right is not enough. Design matters. And one area still needs much clearer thinking: how AE relates to the self-employed.

It is important to be clear about what AE is and what it is not. The proposed system does not require employers to contribute (though they are incentivised to do so through fiscal credits). The contribution comes from the worker. The employer's role is mainly administrative. To deduct, pass on, and manage the process through payroll.

This changes the nature of the problem. The main concern is not employer cost in the traditional sense. The key concerns are different. The cost of administration. Payroll integration and management. And, above all, understanding what AE is meant to do: help people save for retirement.  These issues apply to employees and to the self-employed alike.

The self-employed are a major part of Malta's economy. Many operate alone. Many employ a small number of workers. If AE applies only to their employees but not to them, the system starts to feel uneven. It also becomes harder to explain and harder to administer.

There is already a warning sign here. It comes from the state pension system. For many self-employed people, national insurance contributions are seen as a tax rather than an investment in future income. As a result, income is many times under-declared to reduce contributions.  The consequences only become clear much later, when the first state pension payment arrives and is far lower than expected.

The same behavioural risk exists with AE. If it is not well explained or feels detached from real benefit, self-employed persons and their employees will try to minimise or avoid it. If the self-employed are left outside the system altogether, the message becomes even weaker. Saving for retirement is seen as optional, distant, and easy to postpone.

I am concerned that this would repeat the same pattern we already see with the state pension.  Short-term decisions leading to long-term hardship. This is why clarity matters. AE needs to be understood as support, not as another deduction. It is there to help people build something they otherwise struggle to prioritise. That message must apply to everyone who works, not only to those in standard employment.

Other countries have faced the same issue. There is no single model, but the direction of travel is clear. Leaving the self-employed entirely on their own creates gaps. It increases avoidance.  It weakens coverage. Systems that work tend to find ways to include them, while recognising that their situation is different. Inclusion does not mean identical treatment. The self-employed have uneven income and greater risk. Any arrangement must allow flexibility. What matters is that they are not excluded from the structure altogether.

One practical solution lies in representation. Rather than expecting each self-employed person to navigate pension providers on their own, a representative body could act as a coordinating body.  A chamber or association that already represents self-employed interests could help organise access to a standard scheme, agree basic terms, and support communication and understanding.  This would reduce costs. It would simplify administration. And it would reinforce the core message that AE exists to support long-term income, not to act as a penalty or a tax. 

I believe the real risk is not resistance. There is confusion among self-employed people and those they employ. If AE is not clearly understood as a way to build future income, it will be treated as a cost to be managed down.  If self-employed persons see it as something that applies mainly to their employees, rather than as part of their own long-term planning, engagement will be weak from the outset.

AE will improve retirement outcomes for self-employed people and for those who work for them.  But it will only do so if it aligns with how small businesses actually function in practice, where owners and employees operate closely together and face similar long-term income risks.

The government has not yet published the final framework for AE. That leaves room to design an approach that speaks directly to self-employed persons and their employees, rather than treating one as an administrative conduit for the other.  If this clarity is missing, the same pattern concerning self-employed persons already visible in the state pension system is likely to repeat itself: low engagement, short-term decisions, and outcomes that disappoint when it is too late to adjust course.

David Spiteri Gingell is a Governance, Institutional, and Digital Transformation Consultant