The Maltese government has closed a seven-week public consultation on the introduction of automatic enrolment (AE) for occupational pensions.

Under the proposed system, employees will be auto-enrolled into workplace pension schemes with a minimum contribution rate of €50 per month. Employer contributions will be voluntary to “maintain business flexibility”, the consultation stated.

However, the government has committed to match individual contributions for public sector employees, up to a maximum of €100 per month, demonstrating its “commitment as an employer to leading by example in retirement savings initiatives”.

Currently, Malta’s pension system consists of a pay-as-you-go first-pillar state system and voluntary second- and third-pillar pension systems.

The government is concerned by a rising old-age dependency ratio – projected to increase from 27.1 per cent in 2022 to 65.4 per cent in 2070 – and a pension adequacy gap.

The state pension benefit ratio is projected to decrease from 39 per cent in 2022 to 32 per cent by 2070, meaning many retirees will struggle to maintain their pre-retirement standard of living and fall short of OECD averages.

To address these challenges, the government has progressively introduced tax incentives to encourage the uptake of voluntary private pension savings. However, at the end of 2024, an estimated 4,667 members (c.2 per cent of 18- to 60-year-olds) were members of an occupational pension scheme – a figure the government deemed as “critically low”.

As of the end of 2024, six providers were licensed to offer occupational pension plans classified as qualifying schemes under Malta’s Voluntary Occupational Pension Scheme Rules (S.L. 123.175).

In the wake of the challenges, the 2025 Government Budget Speech stated: "This government not only addresses current household income, but it also plans for the future. Our goal is to cultivate a strong savings culture to ensure that future pensioners have adequate income in retirement."

The Budget Speech further emphasised the need to promote occupational pension plans, ensuring that every employee entering the workforce or changing jobs has the opportunity to save in a retirement plan.

"While employers will not be required to make contributions, they must provide employees the opportunity to join a plan. It is the employee’s choice to decline,” it set out.

There are currently two types of entities authorised to offer occupational retirement products in Malta.

First, Retirement Scheme Administrators, licensed under the Retirement Pensions Act, that manage and administer pension schemes. Second, long-term insurance undertakings, licensed under the Insurance Business Act, which manufacture and distribute insurance-based occupational pension products.

The proposed AE regime would be regulated solely under the Retirement Pensions Act.

“In this regard, entities which would like to offer an occupational retirement scheme would be required to obtain an authorisation as a Retirement Scheme Administrator under the Retirement Pensions Act and then create an occupational retirement scheme which is compliant with the new auto-enrolment regime requirements and authorised under the Retirement Pensions Act,” the consultation stated.

A government response is likely to follow later this year. While no official rollout timeline has been confirmed, the consultation suggests the scheme could begin in the public sector before expanding to private-sector employees.

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