Advisory body pushes private pension schemes in National Strategy for Financial Services

The Malta Financial Services Advisory Council suggests opt-out pension plans for employees and tax cuts on income from private pension schemes in new financial services strategy

Launch of the National Strategy for Financial Services
Launch of the National Strategy for Financial Services

Tax cuts on income from private pension schemes and an opt-out pension plan for employees are being recommended by the Malta Financial Services Advisory Council in the new National Strategy for Financial Services.

The advisory body says Malta has an opportunity to expand its Second Pillar Pensions through personal private retirement schemes or through employer pension plans, in turn alleviating pressure on the government’s pension system.

The council’s suggestions include tax incentives for employer pension contributions, an opt-out pension plan system for employees, and an advantageous tax rate on pension income from private pensions.

It’s also suggesting de-minimis rules that allow pension pots of €10,000 or less to be withdrawn as a lump sum and taxed as pensionable income.

Other initiatives outlined in the strategy document include a centralised identity management and due diligence portal, a law reform task force for financial services, and a change in processes to obtain timely convictions for financial crime.

The council also pointed out that digitisation efforts in government are being hampered by the current government procurement processes.

It also suggested that clear distinctions are made between contraventions of tax law requirements and conscious criminal evasion of tax.

The national strategy was launched on Wednesday with the aim of strengthening Malta’s position in the industry.

The strategic priorities of the strategy include streamlining regulatory processes, building a national payments infrastructure, consolidating identity management, enabling financial services law reform and harmonisation, and modernising Malta’s tax structure, among others.

Joseph Zammit Tabona, who chairs the council, said that the strategy is the fruit of stakeholders in the private sector, government and regulatory bodies. “While not an easy change to implement, it will transform the industry and fully leverage the sector’s potential on the island.”

George Vella, Chairman of FinanceMalta, said that it will continue to support the industry and contribute as needed throughout the implementation of the strategy.