The government is to launch a voluntary occupational pensions scheme and will match contributions made by public sector workers, Finance Minister Clyde Caruana announced in his budget speech on Monday.

The initiative aims to expand pension savings options for employees by encouraging both public and private sector workers to participate.

“While employers will not be obliged to contribute, they must offer their employees the opportunity to join such a plan.  It is up to the employee to decline this option,” the minister said in his speech.

But, he added, the government would set the example by enrolling all its workers in a pension scheme and matching contributions which they choose to make, up to €100 per month. The workers here too, would have an opt out.

Caruana said this plan will benefit from the same tax incentives currently available, both for employers and employees.

Those already having a private pension scheme can also join an occupational pension scheme.

‘Those already enrolled in a private plan can also join an occupational plan and enjoy the same set of fiscal benefits. The next step is to finalise the details through discussions with the relevant sectors and social partners, so that these schemes can be implemented in our country by mid-next year.’

Times of Malta indicated the government’s plans last week, saying it marked  the government’s most substantial step yet towards establishing a third-pillar pension system.

As part of the new scheme, an estimated 50,000 public sector workers will initially be covered, with similar options available to private sector workers.

Currently, an annual tax credit is given to individuals who make contributions to a personal retirement scheme at 25% of the aggregate amount of the qualifying contributions made during a year, up to a maximum of €750.

An annual tax credit is also available to employers, amounting to the lower of 25 per cent of the amount of contributions paid and €750 for each employee in respect of whom the contributions are paid.

Those deductions will also apply to occupational pension schemes.

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