Malta’s Proposed Auto-Enrolment Occupational Pension Regime: Key Implications for Employers and Employees

Introduction

On 18 June 2025, the Government of Malta, through the Ministry for Finance, launched a month-long public consultation on the introduction of an auto-enrolment occupational pension regime. This initiative seeks to strengthen long-term retirement savings by requiring employers to offer qualifying pension schemes and automatically enrol eligible employees, subject to an opt-out option.

Which Legal Frameworks will be Impacted?

Occupational pension plans in Malta are currently offered by two categories of licensed holders governed by distinct legal frameworks. These include Retirement Scheme Administrators, licensed under the Retirement Pensions Act, and long-term insurance undertakings, licensed under the Insurance Business Act. Both categories of license holders enable employers and employees to take advantage of the tax incentives under the 2017 Voluntary Occupational Pension Scheme Rules.

The auto-enrolment occupational pension regime is proposed to be regulated under the Retirement Pensions Act, which aligns with the EU’s Institutions for Occupational Retirement Provisions (IORPs) II Directive. All authorised insurance undertakings wishing to offer auto-enrolment pension schemes will need to set up a separate entity licensed as a Retirement Scheme Administrator. These entities must ensure full compliance with the Retirement Pensions Act and future auto-enrolment regulations.

Which Employees are Eligible?

Under the proposed system, employers must automatically enrol eligible employees into an occupational pension scheme, unless the employee chooses to opt out. All eligible employees must be paying social security contributions in Malta.

To be eligible, employees must:

• earn/ be entitled to earn a wage or salary;
• be between 18 years of age and within 10 years of retirement age;
• be Maltese tax residents or habitually work in Malta;
• be employed on a full-time or part-time basis (if the employment is their main source of income);
• not be on probation under the Employment and Industrial Relations Act.

Workers under 18 years of age or less than 10 years away from retirement age can opt in voluntarily.

Contributions

Contributions, set at a minimum of €50 per month, will be deducted from the employee’s salary. While employer contributions are voluntary, they must follow the same payroll cycle and are eligible for tax credits. Contribution breaks are allowed in specific situations like unpaid leave or career breaks.

Obligations on Employers

Under the proposed auto-enrolment pension regime, employers will be required to identify a qualifying occupational pension scheme which they wish to use to offer pensions within their organisation, ensuring this is in line with auto-enrolment rules. Employers are then obliged to enter into a formal agreement with a license holder providing an auto-enrolment occupational retirement scheme. This contract must outline the responsibilities of both parties, including how salary deductions will be handled, how information will be shared, and how employee data will be protected.

Within 4 weeks of an employee becoming eligible, the employer must provide clear and comprehensive information about the pension scheme, including the employee’s right to opt out. Additionally, if an employee opts out, the employer is required to offer them the opportunity to re-enrol each year, and to allow them a 60-day window to change their decision after opting out.

Employers are prohibited from discouraging participation. This includes asking job applicants if they plan to opt out or offering financial incentives such as higher salaries or bonuses in exchange for opting out of the pension scheme.

Employee Safeguards

Employees are protected from any negative consequences for asserting their rights under the auto-enrolment system. Reporting breaches of auto-enrolment obligations cannot be treated as a grievance, nor used as grounds for dismissal or other adverse treatment. If an employee believes their employer has failed to meet its obligations, they have the right to file a complaint with the Industrial Tribunal or the Civil Courts.

Treatment of Existing Occupational Pension Plans

Existing occupational pension plans will not be considered equivalent to the new auto-enrolment regime. However, employers currently offering such plans will be seen as fulfilling their obligations, but only for employees already enrolled. New employees, and existing employees not yet subscribed, must be enrolled in a scheme that fully qualifies within the auto-enrolment regime. This means employers may need to manage two parallel pension schemes: the existing one for current employees, and another occupational retirement scheme that qualifies under the auto-enrolment regime for new employees and existing ones not yet subscribed to the plan.

What are the Next Steps?

Stakeholders are invited to submit comments or feedback on the consultation document and draft legislation by 17 July 2025. All responses will be shared with the MFSA, and a Feedback Statement will be issued following the consultation period.