On Monday 25th November, The Malta Chamber of Commerce, Enterprise and Industry in collaboration with BOV organised an event entitled Occupational & Personal Pensions: A Sustainable Way Forward. This event was organised to provide businesses with information about the fiscal incentives introduced by the government in recent years, the Pension Framework and financial education for employees. The event was chaired and moderated by the Malta Chamber’s Human Resources Committee Chair, Ms Catherine Calleja.
President of the Chamber, Perit David Xuereb, delivered the opening speech stating that, “the Chamber is concerned that entrants in the labour market today will receive a pension that is less adequate than that enjoyed by persons who retired between 2005 and 2010.”
Perit Xuereb also noted that the Chamber recognises the important work carried out by Government in introducing voluntary retirement and personal pension schemes. Within three years from the launch of these schemes membership now stands at approximately 4,500. He added that more needs to be done. He urged Government to consult with providers of occupational and personal pensions schemes for their feedback and advice to increase their uptake in order to ensure that our future pension system remains sustainable.
The keynote address was given by Mr David Spiteri Gingell, Chairman of the Retirement and Financial Capability Group – who focused on the occupational pension scheme as a strategic HR retention tool. Mr Spiteri Gingell commented about the fact that businesses today must operate in an employee’s market and be more competitive in their offers.
According to Mr Spiteri Gingell, employers should offer much more in order to compete for employees; ergo, offer pensions to attract and retain employees. He states that, “Research in the UK shows that employees are not only after bigger salary or bonus. 82% of UK employees said pensions were an important part of their benefits package, ahead of performance related bonuses, support for mental health and stress and private medical insurance.”
Following the keynote address, BOV Head Bancassurance, Mr Mario Farrugia, gave an account of the personal and workplace pensions offered by BOV. Speaking about Third Pillar Pensions, Mr Farrugia mentioned that funds become only accessible between the ages of 61 – 70 and that the funds are 70% taxable.
Subsequently, Ms Calleja called upon the panellists for the discussion and they all highlighted different aspects to the Pension system in Malta. Mr David Spiteri Gingell (RFCG) commented about the possibility of an ‘Auto-enrollment’ with an opt-out option within corporate structures. Ms Alexia Frendo – Lead HR Business Partner within Kindred Group, discussed their own pension scheme and its uptake. Mr Nicholas Xuereb – CFO at Toly Group, a multinational company that has pension schemes both in the UK and the USA cited cost competitiveness as one of the reasons a similar scheme would not work in Malta. Dr Matthew Brincat – General Secretary at Malta Association of Retirement Scheme Practitioners (MARSP) focused on the mobility requirements and its legal implications and implementation and Mr Mario Farrugia highlighted the difference between the services the Bank offers. One of the challenges which were exposed by the panel was that the market is too saturated with limited returns on investment opportunities, forcing pension providers to be invest in higher yielding investments which were deemed risky.
BOV Chief Business Development Officer Mr Kenneth Farrugia closed the discussion. In his closing remarks, Mr Farrugia thanked the Chamber for their constant collaboration. He said that the first pensions pillar will remain unsustainable. If no alternative systems are in place, the fiscal burden on the next generations entering the labour market will continue to increase to sustain an ever-growing ageing population. He urged all stakeholders including the private sector and the authorities to open discussions to seek a long-term plan.