Insurers says more ambition required for mandatory workplace pensions

Insurance Association Malta applauds government’s voluntary workplace pension scheme but calls for mandatory action

By: maltatoday.com

Oct 31 2024
6
2756 Views

Insurers says more ambition r

The Insurance Association Malta is urging the government to be more ambitious in laying down the blueprint for mandatory workplace pensions with a voluntary opt-out, while introducing a transitory framework for employers to contribute to such schemes.

The IAM applauded the government for taking the bold step of leading by example and committing to roll out a workplace pension scheme for public sector employees and matching its workers’ contributions up to €100 a month.

In his Budget speech, finance minister Clyde Caruana said employees, or those who change jobs, should be given the opportunity to invest in an occupational pension plan.

“Although this is a step in the right direction, it is still unclear from the wording used whether the workplace pensions will apply to existing or new employees and in the case of the latter, whether such schemes would apply across the board or certain segments, such as by age,” IAM said in a statement.

Caruana however urged both private and public sector workers to take part where schemes are available and insisted that while employers were not obliged to match employees’ contributions, they were encouraged to do so and top-up employees’ contributions.

“Malta lost 20 precious years with very little progress showing for the time lost. Now that more and more trade bodies and unions are in agreement and as reported recently, would favour the introduction of such auto-enrolment workplace pensions with a voluntary opt-out, the authorities should be bold enough to introduce such measures without further ado,” the IAM said.

“Since the budget speech understandably lacks any detail, we encourage the authorities to consult the relevant stakeholders to ensure a successful roll-out of mandatory workplace pensions with a voluntary opt-out.”

IAM said it looked forward to learning more about the government’s mechanisms to roll out the schemes announced in the budget and hoped it would be able to contribute around the discussion table with proposals.

The association also emphasised the importance of financial literacy and said this should not be underestimated as the country can still face a real risk of employees opting out purely as a result of lack of knowledge or understanding.

“In a country, which was so far, is totally dependent on the safety net provided through state pensions, understanding the pros and cons of pension products helps people make an informed decision,” the IAM said.

“The country cannot afford to continue postponing and bury this matter under the sand as much as it cannot rely on the state to dish out money, earned from taxes to secure our welfare which is only intended to act as a basic safety net. We need to start contributing to our future if we wish to have a good future after all.”